Pensions - key issues for your trustee agenda January 2023

Get up to speed on dashboards. The Pensions Regulator (TPR) is urging schemes to make sure they’re prepared as staging dates move closer – and notes that it will take “a dim view” of those who “fail to prioritise their dashboard responsibilities.”

We have now had the DWP’s response to its consultation on the dashboard regulations, and expect the final version imminently; the Pensions Dashboards Programme’s consultation on draft dashboard “standards”; updated TPR guidance, and industry guidance on data accuracy, amongst other things. 

ACTION: ensure your scheme is aware of its staging date, and continue to take steps so that your data is in order and your scheme ready to connect.

• consultation on its draft DB funding code was published in December, alongside revisions to its proposed ‘Fast Track’ mechanism and regulatory approach. The new regime is expected to come into force with effect from 1 October 2023, for valuations falling from that date.

• DB schemes’ funding and investment strategies will be expected to have a long-term objective for providing scheme benefits. Schemes should start to consider how the new requirements will impact their current funding approach.

ACTION: Watch out for publication of the final Code, and finalised DWP regulations, in 2023. Be aware that further changes may yet be made to both, stemming from discussions around Liability Driven Investments (‘LDI’ – see below). New covenant guidance from TPR is also expected in 2023.

• Autumn saw pensions making headlines as the Bank of England stepped in with measures to support market functioning, including gilt purchases, following the September mini-budget. While the industry stressed that members’ pensions remained safe, schemes were urged to take steps to review and manage risk going forwards.

• TPR has since issued a guidance statement calling on schemes to maintain resilience and governance in leveraged arrangements, and setting out practical steps trustees should take. It plans to issue an update in its April 2023 Annual Funding Statement, with further guidance as necessary.

ACTION: Trustees should familiarise themselves with TPR’s recommendations. And with the Work and Pensions Committee’s Inquiry ongoing, and the Bank of England recommending that further regulatory and supervisory action is required, watch out for further impact stemming from this ‘crisis’.

• Since 2019, trustees have years been required to send a statement to the Competition and Markets Authority (CMA) confirming the extent to which they have complied with requirements in relation to investment consultants and fiduciary managers.
• From 1 October 2022, TPR takes over the compliance monitoring from the CMA, with reporting to be made via the scheme return. TPR has published revised guidance for trustees on the tendering process for fiduciary managers and for setting objectives for investment consultants. 

ACTION: whilst affected schemes should already be largely compliant with the requirements, there are some technical differences between the two regimes to be aware of.