We recommend prioritising these issues on your Winter agenda

  • changes in relation to the Lifetime Allowance, by 6 April 2024
  • scheme governance – with a particular emphasis on the Regulator’s General Code, and cyber security
  • DB funding and investment regime changes.

Plus – what to keep an eye on, and what to look out for in the coming weeks.

Lifetime allowance tax changes post-Budget

Following the removal of the Lifetime Allowance (LTA) charge from 6 April 2023, new Finance Bill provisions published after the Autumn Statement move to abolish the LTA altogether from 6 April 2024. The Bill introduces two new lump sum allowances, and addresses benefit crystallisation events and the impact on tax protections from that date. A new deadline of 5 April 2025 is also proposed for applications for certain existing protections.

Some changes initially proposed in July 2023 have not been taken forwards, including in relation to significant tax changes to benefits on death before age 75.

ACTION: Employers and trustees will have to work fast during Q1 2024 to ensure they are ready for the changes. We will be following the progress of the Bill closely. In the meantime, HMRC published guidance for trustees on 20 December in the form of a Lifetime allowance newsletter, which schemes should familiarise themselves with.

Our Insight set out initial key action points post-Spring Budget. Ensure you have given your scheme documentation a health check; consider your communications and how to liaise with members to ensure the changes are understood; and update your record keeping where necessary. Ensure that third parties are ready to put in place and follow updated processes carefully; this is a likely area for future complaints to the Ombudsman.

Governance - General Code and cyber concerns

The final version of TPR’s new ‘General code’ is expected to be laid early in the new year, to come into force in April. We will keep you up to date with any significant changes from the original draft.

Meanwhile, TPR has issued an updated version of its cyber security principles, setting out practical steps for schemes to take to meet TPR's Code expectations in this area. It asks that trustees and providers report any significant scheme-specific cyber incidents to TPR as soon as reasonably practicable (in addition to reporting to the ICO). The guidance covers the controls TPR expects to see in place in areas including risk prevention, detection and incident response. As schemes are accountable for cyber and data risk, they should ensure all relevant third parties have also implemented the right controls and response processes.

ACTION: Schemes should continue to identify gaps in their governance before the Code comes into force. Speak to us about the steps you need to take and how we can help. Get up to speed with TPR’s cyber risk update; for practical advice on preparing for and handling cyber incidents and attacks, watch our recent ‘Trustee Survival Guide 2023’ webinar.

DB funding

Changes to the DB funding and investment regime are due into force in April 2024, and likely only to take effect for valuations from late 2024 onwards. Watch out for the DWP’s final regulations, and TPR’s code, in the new year.

ACTION: Schemes should get up to speed as quickly as possible to consider how the changes will impact their current funding approach.

TPR recently reminded schemes considering alternative or innovative DB funding arrangements, including when a sponsoring employer is financially distressed, to proactively engage with the employer and TPR, and PPF if applicable, as early as possible. Factor in enough time: depending on the complexity of the arrangements, any assessment TPR carries out will take two to six months. Trustees also need to have sufficient knowledge and skill to weigh up the arrangement and manage conflicts; TPR reminds them to seek advice.

Pensions Dashboard

With information on the updated staging timetable, data and connection guidance expected imminently, TPR has been urging schemes to make sure they’re ready for connection. PASA’s recent guidance suggests schemes will need around 18 months to be fully 'connection ready' due to industry-wide capacity constraints – so ensure it’s still on your agenda. Its 'Call to Action' outlines five key actions for schemes to take now.

Key cases 2024

Various cases of interest are due in 2024, with two of particular note having appeals heard in June:

  • The industry will be watching the appeal in Virgin Media (where certain amendments to DB contracted-out scheme rules were held void if introduced without actuarial confirmation) with great interest, given its potential impact on historic changes. 

  • The BBC case, which considered the fetters on a scheme's amendment power in the context of a cost-cutting proposal, will also be keenly followed.

Date published

04 January 2024

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