Pensions: what's new this week - May 2022 # 5

Allen & Overy LLP

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/FCA: feedback on DC value for money; TPR 2022 annual funding statement analysis; 70 years of workplace progress; Tax on dormant assets; Next edition.

  • TPR/FCA: feedback on DC value for money
  • TPR 2022 annual funding statement analysis
  • 70 years of workplace progress
  • Tax on dormant assets
  • Next edition

TPR/FCA: feedback on DC value for money

The Pensions Regulator (TPR) and Financial Conduct Authority (FCA) have published industry feedback in relation to their September 2021 discussion paper on driving value for money (VFM) in DC pensions. The regulators’ aim is to create a common framework and metrics for measuring VFM holistically, and to encourage a long-term focus on VFM in the pensions sector. The proposals are based on three key elements: investment performance; customer service and scheme oversight; and costs and charges.

The feedback received includes general agreement that a holistic approach to assessing VFM is needed and that the three elements proposed are the right ones, but there are a number of areas of detail where there is no clear consensus. The regulators will consider these areas and, with further input from stakeholders, develop proposals which will be consulted on towards the end of the year.

Read the statement.

TPR 2022 annual funding statement analysis

TPR has published a review of the expected funding positions of DB pension schemes with valuation dates between September 2021 and September 2022 (Tranche 17), providing context to last month’s annual funding statement. In previous years, TPR has included analysis on trends in potential employer affordability and has shown schemes in categories based on employer covenant strength. The impact of the Covid-19 crisis, Russia’s military invasion of Ukraine and Brexit has meant that for many schemes, historic data are of limited relevance in assessing current/future affordability so, as with last year, these have been excluded from this year’s report.

Overall, TPR’s modelling suggests that Tranche 17 schemes will show improved funding levels from those reported three years previously and current recovery plans will be on track. However, the position for individual schemes will vary depending on their specific inter-valuation experience, valuation dates, funding assumptions and investment strategies. Employers may also be affected by Covid-19, Ukraine and Brexit; this has not been reflected in TPR’s analysis but should be considered by schemes.

Read the report.

70 years of workplace progress

Ahead of the Queen’s platinum jubilee, our colleagues in the Employment team have been looking at how changing laws and attitudes throughout the decades have helped to create a fairer era for workplace culture, with implications for both employment and pensions. They have also made some predictions on what they think the future holds.

At the start of the Queen’s reign in 1953, workplace discrimination was commonplace and lawful. Today, the personal characteristics of workers such as sexual orientation, religion, gender and pregnancy have statutory protection against discriminatory practices. This publication charts the history of the events, legislation and landmark cases that have brought about this change.

Read ‘Workplace dignity and diversity: celebrating 70 years of progress’.

Tax on dormant assets

Regulations have been made extending exemptions from capital gains and income tax, to take account of the Dormant Assets Act 2022. The 2022 Act extended the Dormant Assets Scheme (DAS) to include some insurance and pension products and the new regulations allow transfers from those products to benefit from tax exemptions from 6 June 2022. The DAS allows assets which have not been claimed to be transferred and used for good causes. HMRC has also updated its guidance on the DAS.

Read the regulations and HMRC’s guidance.

Next edition

The next edition of What’s New This Week will be with you on 13 June.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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