In the April edition of our Taylor Wessing Pensions Bulletin, we give a snapshot of some recent pensions developments, which include:
Professional Trustees and The Pensions Regulator - new oversight and new conversations
The Pensions Regulator (TPR) has announced a new framework for overseeing professional trustees, with responsibility for establishing 'ongoing supervisory relationships' falling on a Market Oversight Team at TPR. This work will begin in the Summer and is expected to cover all professional trustee firms by the end of the year. TPR has said that it recognises that such firms operate with a variety of structures and models, with significant recent expansion. In its Market Insight Report, TPR identified where there could be particular risks to savers' outcomes and where it intends to focus engagement, which include sole trusteeship, relationships with employers, in-house advisers and scheme decision makers. Therefore, TPR has said that ''As part of [its] new risk-based and outcome-focused approach to regulation, [it is] extending [its]engagement with these firms to identify and mitigate any risks to pension savers". Professional trustees firms can therefore expect increased engagement with TPR in the coming months.
Pension dashboards - first expected connection dates arrive and TPR reminders about preparation
All pension schemes and providers in scope in the pensions dashboard framework are legally required to be connected to the pensions dashboards ecosystem and be ready to respond to requests for pensions information by 31 October 2026 at the latest. In statutory guidance which schemes must have regard to when preparing for pension dashboards, there is a staged connection timetable for schemes. The first suggested deadline for connection, for the largest DC master trusts and larger personal pension schemes (amongst others) has arrived (30 April) with the next following soon after (May, June, August and so on as per the timetable).
In a recent blog, TPR has released a series of videos highlighting the difference that pension dashboards will make to savers and also indicating five actions TPR wants scheme trustees to be taking to prepare for their upcoming scheme connection dates which are to:
- start preparing data now and to make sure it is accurate, accessible and digital
- download TPR’s checklist to keep on track of dashboards preparations
- nominate a dashboards contact through TPR’s Exchange portal to receive communications and guidance to help prepare
- work with the scheme's administrator, AVC providers, and others supporting the scheme throughout the process
- keep a record of decisions and preparations and maintain oversight at board meetings.
There is a particular focus on data, saying 'It is important trustees and administrators ensure they are taking the right steps now to prepare for dashboard connection and to prepare their data' and that TPR will be ramping up its focus on data over the coming months. Trustees should continue to liaise with their advisers in their preparations, bearing in mind the expected connection date for their schemes.
Preparing data for buy-ins and buy-outs; PASA expands its guidance
In February 2023 the Pensions Administration Standards Association (PASA) issued guidance on data readiness for buy outs and buy-ins and it has now updated this to include a list of key data items required for a successful transaction. The list includes the data items relating to the different types of member (active, deferred etc.) and an indication of the importance of each data item. The update is said to combine collective feedback from insurers and industry to share best practice with a view to enabling optimum pricing and for members' benefits to be secured in an accurate and timely manner.
The Guide, whilst offering practical support for trustees and administrators, also notes that it cannot cover every unique circumstance and that those responsible for managing data strategies should always consider scheme specific needs and work closely with professional advisers to tailor individual plans.
As David Fairs (the new chair of PASA) notes, expectations around data are equally relevant for schemes exploring a range of endgame solutions and that higher data quality can significantly enhance the de-risking journey. It will also be crucial for schemes preparing to comply with pension dashboard requirements.
Small pension pots consolidation – further developments
The Government announced in the last King's Speech that the forthcoming Pension Schemes Bill will include measures to address the issue of small deferred pension pots (which follows on from the previous Government's commitment to introduce large scale automated consolidation of small pots). The Small Pots Delivery Group's work has been involved with looking at the policy design choices for this and in the publication of its findings, the Government has confirmed it will legislate for a Multiple Default Consolidator approach (which, in simple terms, is where eligible deferred pension pots would automatically be transferred to a consolidator chosen by or allocated to the member) in the next Pension Schemes Bill. In the immediate term, a feasibility review is to be carried out in Spring 2025 which will inform the provisions in the Pension Schemes Bill, and pension scheme involvement in the design and direction of the digital infrastructure for this model is to be led by the Pensions and Lifetime Savings Association (PLSA) . Once the Pension Schemes Bill is passed, it is intended that, following industry consultation, regulations will be drafted during 2026, with 'elements of the legislation' expected to come into force 2027/28, and with duties on pension schemes to transfer and consolidate eligible pots likely to come into force from 2030. While these measures appear to be some time in the future, they will clearly have a significant impact on the operation of pension schemes which will need to keep track of developments to ensure they are ready to deal with any new requirements.
