Welcome to your weekly update from the Allen & Overy Pensions team, covering all the latest legal and regulatory developments in the world of workplace pensions.

This week we cover topics including: TPR launches diversity and inclusion survey; Brexit Act given Royal Assent; TPR publishes DC schemes survey; HMRC Pension Schemes Newsletter.

TPR launches diversity and inclusion survey

The Pensions Regulator (TPR) is inviting trustees of defined benefit (DB) and defined contribution (DC) schemes to take part in an anonymous online survey gathering diversity and inclusion (D&I) data about their schemes. The survey includes questions on:

• trustees’ protected characteristics, academic and socio-economic backgrounds and work experience;
• trustees’ views on D&I and what D&I data about trustees is being recorded by schemes;
• actions being taken to ensure D&I among trustees in their work and whether information on benefits for savers is being captured; and
• awareness of TPR’s equality, diversity and inclusion action plan.

TPR expects to publish the results of the survey before the end of 2023.

Read more.

Brexit Act given Royal Assent

The Retained EU Law (Revocation and Reform) Act – the Act that seeks to revoke retained EU laws (REUL) from UK legislation following the UK’s departure from the EU – has been given Royal Assent. The Act includes a schedule setting out a list of REUL that will be repealed with effect from the end of 2023. There is no pensions legislation included in the schedule of REUL to be revoked.

Read the Act.

TPR publishes DC schemes survey

TPR has published the results of its annual survey of trust-based occupational DC pension schemes. The survey highlights that compliance with governance requirements is more likely in larger schemes than smaller ones. For example, over three-quarters of master trusts and around half of large and medium-sized schemes met value for members (VFM) assessment requirements, compared with 16% of small and 18% of micro schemes. Across all scheme sizes, the primary reason for not meeting those requirements was that they did not research the characteristics, preferences and needs of members and take account of this when assessing VFM. The survey also found that 64% of schemes with less than £100 million of assets under management were unaware of their obligation to carry out a more prescriptive VFM assessment. It notes, reiterating previous messaging, that ‘TPR expects schemes that are not offering value to take immediate action or consider winding up’.

Other insights from the survey include:

• there has been a net increase across schemes in spending on managing and improving data over the past two years;
• the vast majority of large schemes (86%) had allocated time or resources to assessing any financial risks and opportunities associated with climate change. Climate change actions included added climate-related risks to risk registers; including climate-related issues in trustee training plans and as a regular agenda item at trustee meetings; including, monitoring and reviewing targets in the scheme’s climate policy; and assigning responsibility for climate-related issues to a trustee or sub-committee. Again, these actions were more common among larger schemes; and
• only 17% of schemes formally obtained and recorded any diversity data in relation to their trustees. Where schemes did record data, it was most likely to cover sex (17%) and age (17%), followed by ethnicity (13%), disability (9%) and education (7%). Very few schemes recorded data on religion/belief, gender identity or sexual orientation.

Read more.

HMRC Pension Schemes Newsletter

HMRC’s latest newsletter (no.151) includes an update on the treatment of stand-alone lump sums (SALS) following the announcement of the abolition of the lifetime allowance in the Spring Budget. The government has amended the Finance (No. 2) Bill to make clear that any amount of a SALS in excess of the 5 April 2023 maximum may still be paid to the member as a SALS and, where there is an excess, this is subject to the member’s marginal rate of Income Tax. The newsletter includes details on how to report tax on lump sums until payroll systems can be updated (which should be done as soon as possible and by no later than 30 September 2023) and how to process the tax on SALS.

The newsletter also confirms that HMRC has updated its annual allowance calculator to reflect the increase to the annual allowance, adjusted income and money purchase annual allowance for the 2023 to 2024 tax year (also announced in the Spring Budget) and gives information on migration to the Managing Pension Schemes service. Note that schemes with a Pension Scheme Tax Reference starting with ‘0’ must have completed migration by the filing deadline of 14 August 2023 to ensure that they can file Accounting for Tax (AFT) returns for the quarter 1 April 2023 to 30 June 2023 without incurring interest and penalties. Pension scheme returns for the tax year ending 5 April 2024 must also be submitted on the Managing Pension Schemes service.

Read the newsletter.