The Pensions Brief: November 2024

Issues affecting all schemes

Pensions dashboards – updated standards

The Pensions Dashboards Programme has published updated versions of:

• The dashboards code of connection – This sets out how schemes and dashboard providers are to connect to the dashboards ecosystem and what they need to do to remain connected. It details the mandatory requirements that must be met, as well as the recommended ways in which they should be implemented.
• The dashboards data standards – These set out the data formatting requirements that schemes must follow when returning pensions data in response to view requests.
• The dashboards reporting standards – These set out the requirements that schemes must comply with in relation to recording of operational information and the reporting of that information to the Money and Pensions Service.

The code and standards remain subject to ministerial approval.

Action

Trustees and administrators should review the updated standards and factor them into their dashboards preparations.

Autumn Budget – legislation

Following the Autumn Budget, a Finance Bill has been laid before Parliament. Its pensions-related provisions include:

• Removal of the exemption from the overseas transfer charge for transfers to qualifying recognised overseas pension schemes in the EEA or Gibraltar with effect from 30 October 2024.
• Introduction of a requirement for scheme administrators (for tax purposes) to be UK resident with effect from 6 April 2026.

Action

Trustee and administrators should monitor the Bill’s progress through Parliament.

Data breaches – guidance on communications

The Information Commissioner’s Office (ICO) has published guidance on communicating with empathy in the event of a data breach. The guidance encourages organisations, in the event of a breach, to:

• Promptly assess the risks to the individuals involved, including the organisation’s reporting and notification duties.
• Acknowledge what has happened with the people affected by the breach.
• Be human and accessible in the organisation’s response and commit to making sure it does not happen again.
• Share the ICO’s simple guidance for individuals impacted by a data breach.
• Share the ICO’s toolkit of resources with staff.

Action

No action required, but trustees and administrators may find the guidance helpful when drafting communications in relation to a data breach.

Member communications – direct marketing restrictions

The ICO, the Financial Conduct Authority (FCA) and the Pensions Regulator (TPR) have published a joint statement on the interaction of the statutory restrictions on direct marketing with schemes’ communication obligations under the FCA’s Consumer Duty (for contract-based schemes) and TPR’s General Code and guidance. The statement notes that:

• Schemes can provide regulatory communications to members even if they do not have direct marketing permissions from them, provided the communications are not direct marketing. The ICO’s direct marketing and regulatory communications guidance provides advice on how to do this. Schemes should use a neutral tone and avoid active promotion or encouragement when communicating facts to members.
• The context and content of the communication must be considered. The ICO’s guidance contains illustrative examples that demonstrate how regulatory communications can be drafted and delivered in different contexts.
• The law also does not prevent schemes from sending “service messages” that tell members important information that they need to know as part of their relationship with the scheme.

The statement also includes a list of non-exhaustive examples of regulatory communications to members that can be drafted in a way that means they are unlikely to be direct marketing.

Action

No action required – the statement provides helpful confirmation that member communications are unlikely to breach the direct marketing restrictions provided they are factual and neutral in tone and do not provide advice or seek to persuade members to adopt a particular course of action.

Issues affecting DB schemes

DB funding – Fast Track parameters

TPR has published a standalone final version of the Fast Track tests and conditions (these were previously published as Appendix 1 of TPR’s response to its regulatory approach consultation). To make it a standalone document, TPR has made minor alterations, including amending the introduction to give more of the context for Fast Track valuation submissions, which previously featured in the main body of the original document, and deleting later repetition of this. Following feedback from industry, TPR has also made limited and minor wording changes to clarify its intentions.

In addition, the new DB funding code of practice came into force on 12 November 2024.

Action

Trustees and employers of DB schemes with valuation dates falling on or after 22 September 2024 should ensure that they are familiar with the new funding code. Those who wish to submit a valuation under the Fast Track route should also ensure that they are familiar with the Fast Track tests and conditions.

DB and hybrid scheme return – new content

TPR has published guidance on the DB and hybrid scheme return. The return includes new/updated questions on:

• Scheme member data quality (previously called record-keeping).
• Scheme membership details.
• Investment consultant objectives and performance.

Scheme returns will be sent out from December 2024 and must be submitted by 31 March 2025.

Action

Trustees of DB and hybrid schemes should ensure that they submit their scheme return by 31 March 2025.

Issues affecting DC schemes

Mansion House – further DC consolidation reforms

The government has announced plans to create DC “megafunds” and is consulting on its proposals. The government has also published the interim report of its Pensions Investment Review. Under the government’s proposals, DC multi-employer trust-based schemes and contract-based workplace pension schemes would be encouraged to consolidate into “megafunds” by the introduction of:

• Minimum size requirements for default funds.
• Limits on the number of default funds.

2030 is the earliest proposed implementation date. Although the consultation refers to DC multi-employer trust-based schemes, the inclusion of multiple references to master trusts suggests that the proposals only relate to DC master trusts and that other types of DC multi-employer schemes will not be within scope.

The consultation also seeks views on:

• Creating a contractual override for transfers from contract-based schemes without member consent (but with member protections).
• Imposing new duties on employers in relation to considering the overall value (not just the cost) of their chosen automatic enrolment scheme.
• Introducing a duty on employers to name an executive at board level with responsibility for employee retirement outcomes.
• Regulating the advice that employers receive on selection of their automatic enrolment scheme.

The consultation closes on 16 January 2025. For more information, please see our legal update.

Action

Trustees and employers of DC schemes should monitor the outcome of the consultation.

Mayer Brown news

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Duncan Watson, Henry Corrigan and Liam Kellett advised the Scheme Trustee of the Electricity Supply Pension Scheme (in respect of one of its Groups) on a £1.7 billion pensioner buy-in with Aviva. The transaction, which completed in October 2024, included transitioning the Group’s existing longevity swap with Zurich Assurance Ltd to Aviva, and insures the benefits of 5,800 pensioner members of the Group.

Mayer Brown Insights

• Mansion House and pension “megafunds” | Insights | Mayer Brown
• United Kingdom: Pensions – 2024 Highlights and 2025 Outlook | Insights | Mayer Brown

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