Welcome to our monthly update on current legal issues for trustees of DB and hybrid pension schemes, designed to help you stay up to date with key developments between trustee meetings, and to support the legal update item on your next trustee agenda. We also have a separate DC-only briefing.

Autumn Statement

The Autumn Statement included a number of pensions-related announcements and supporting documents (read more), with potentially significant long-term impacts. These included responses to consultations on (i) DC decumulation, confirming that occupational schemes will be required to provide decumulation services; (ii) deferred small pots, with the government pursuing a multiple default consolidator approach; (iii) options for DB schemes, including proposals to encourage investment in productive finance and in relation to paying surpluses to employers; and (iv) trustee effectiveness, with no immediate proposals for legislation. A call for evidence was published on giving individuals a right to require a new employer to contribute to an existing pension pot – a ‘pot for life’, and on expanding the role of Collective DC (CDC) schemes.

Other announcements included that the government is proceeding with legislation to fully abolish the lifetime allowance with effect from 6 April 2024 (draft regulations have now been published) and there will be a consultation in winter on how the PPF can act as a consolidator for DB schemes that are ‘unattractive to commercial providers’.

ACTION: Review/ask for training on the announcements.

TPR’s expectations on corporate M&A NEW

TPR has published the text of a speech recently given by its Chief Executive, setting out its supervisory expectations and approach to the protection of pension schemes during merger and acquisition transactions. The key point to note is TPR’s expectation that, despite the non-arrival of the proposed new notifiable events regime, parties to M&A activity should engage with TPR as if those events were in place already (read more).

ACTION: Be aware of TPR’s expectations in this area; seek advice if relevant circumstances arise.

TPR updates cybersecurity guidance NEW

TPR has updated its guidance on cybersecurity setting out practical steps for schemes to take to meet its expectations in the forthcoming General Code.

In particular, TPR is now requesting that trustees report significant scheme-specific cyber incidents to it as soon as reasonably practicable, to help it build a better picture of the cyber risk facing the industry. The guidance includes sections on key controls and incident response planning. (read more).

ACTION: Review the guidance against your scheme’s current policy and procedures.

Economic Crime and Corporate Transparency Act (ECCTA) and ban on corporate directors

The ECCTA sets out reforms intended to prevent criminal use of corporate entities, some of which will affect corporate trustees, as well as limited partnerships and Scottish limited partnerships used in certain pension scheme structures. The government has confirmed that it will implement a ban on corporates acting as company directors, although an exception is expected for corporate entities with a ‘legal personality’, where the entity’s directors are, in turn, natural persons (read more).

ACTION: Most measures require secondary legislation and guidance before they come into force. Keep a watching brief on developments.

PASA guidance: being ‘connection ready’ NEW

PASA has published guidance defining what it means for a scheme to be ‘connection ready’ for pensions dashboards. The guidance suggests that the expected timeline for reaching this point is around 18 months due to industry-wide capacity constraints (read more).

ACTION: Review the guidance and consider any action points for your scheme.

Guidance on impacts of the McCloud remedy

HMRC has published guidance on potential impacts for private sector schemes of the remedy for age discrimination in public service pension schemes (the McCloud remedy). If an individual is affected by the remedy and has had a benefit crystallisation event (BCE) in a private sector scheme, this could mean the BCE needs to be revisited (read more).

ACTION: Ensure administrators are prepared to process queries from any affected members.

TPR view on capital backed journey plans NEW

TPR has published a blog post discussing alternative DB scheme funding arrangements – in particular, capital backed journey plans. Further guidance is expected in the new year (read more).

ACTION: Review the blog post and engage with TPR if you are contemplating an arrangement of this type.

Have your say

• The government has published a call for evidence on the future of the pension scheme exemption from derivatives clearing requirements (read more). The call for evidence closes on 5 January 2024.

Watch this space

• The launch of the new DB funding code has been postponed until April 2024 (read more).
• There is currently no date for revised regulations on changes to the notifiable events regime (read more).
• Publication of the revised version of TPR’s General Code is expected soon.

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