Issues affecting all schemes
Pensions dashboards – technical standards
The Pensions Dashboards Programme (PDP) has published an updated version of the pensions dashboards technical standards. These provide the basis for communication and connectivity across the dashboards ecosystem. They provide a common set of connection rules for dashboard providers and schemes, determining how parties are to interact and communicate with the central digital architecture of the dashboards ecosystem and each other. The standards remain subject to ministerial approval. The PDP has also published accompanying FAQs on the standards.
In addition, the PDP has announced that GOV.UK One Login will be the identity verification service provider for all dashboard users. The service is provided by the government and is currently used by individuals to access a range of online government services. The PDP has also published FAQs on the identity service.
Action
Trustees and administrators of schemes that are subject to the dashboards duties should review the updated technical standards and factor their contents into their dashboards preparations.
Pensions dashboards – compliance and enforcement
The Pensions Regulator (TPR) has responded to its 2022 consultation on a draft pensions dashboards compliance and enforcement policy. TPR has also published the finalised policy which remains largely unchanged. The policy covers:
- The key areas of risk that TPR will focus on.
- TPR’s expectations of schemes regarding compliance.
- How TPR will monitor compliance.
- TPR’s approach to non-compliance, including the elements it will consider when deciding whether regulatory action is required.
- TPR’s regulatory options.
- How enforcement action can be challenged.
- How TPR will work with partner agencies and regulators.
- An appendix with illustrative scenarios.
TPR has also updated its whistleblowing guidance to include examples of dashboards-related breaches.
In addition, TPR has published a blog post calling on schemes to ensure they are prepared to comply with their dashboards duties. In particular, TPR flags the need for schemes to be measuring, and trying to improve, their data. TPR plans to engage with hundreds of schemes this autumn, asking them how they are measuring and improving their data, and may take regulatory action where schemes are failing to meet its expectations.
Action
No action required, but trustees and administrators of schemes that are subject to the dashboards duties may wish to familiarise themselves with the policy and TPR’s expectations around data measurement and improvement.
Investment – TPR focus
In a recent speech, TPR’s chief executive announced that TPR will be increasing its focus on investments to ensure they deliver value for members. TPR wants and expects different kinds of schemes to invest differently depending on the needs of their members. However, all schemes should have proper risk management controls, and a genuine understanding of what the right balance of risk and reward is for their type of member and their type of scheme.
Schemes should also have a clearly defined objective for members which is regularly reviewed, and trustees should understand the likelihood of achieving that objective by comparing their actual performance with their forecasted models and adjusting strategy accordingly. Investment decisions need not be risk-free but should be the product of informed decision-making. TPR will not tell schemes how to invest but will investigate to make sure trustees and schemes have the controls, capability, and scale to deliver value for members.
Other key points in the speech included:
- TPR believes sound investment in diverse assets can not only improve outcomes for members but could also generate growth for the UK economy.
- For there to be meaningful, positive changes in investment strategies, there must be greater transparency in the industry around performance and costs. The first step is to bring greater transparency on value through the forthcoming value for money framework.
Action
No action required.
Pensions Ombudsman – expedited decision-making
The Pensions Ombudsman (TPO) has published a blog post on how it has been piloting expedited decision-making at the assessment and resolution stages of the “customer journey”. Its initial focus has been on complaints that it has assessed as having a clear outcome and which may not require significant correspondence with the parties if all the information needed to make a decision is already supplied in the application.
In these cases, an initial decision is issued to the parties setting out the caseworker’s view. If any party does not agree, they can ask for the matter to be referred to TPO who will issue a final and binding determination if they agree with the caseworker’s view. In these cases, the parties will be able to get a determination without going through the adjudication process.
During the pilot, very few of the caseworkers’ decisions were referred to TPO for determination and TPO will be fully rolling out expedited decision-making later this month. TPO will also be exploring how best to use the approach to support its work delivering informal resolutions and how it can make sure any industry-wide learnings can be shared since it does not normally publish expedited determinations.
Action
No action required.
Administrators – TPR engagement
TPR has published a blog post on how expanding its engagement with administrators will drive better member outcomes. Key points in the post include:
- The outcome of TPR’s 2023 pilot initiative in which it engaged with three “strategically significant” administrators. The initiative led to various actionable recommendations that administrators have already started to implement, including:
- Enhancing internal checking processes.
- Recognising the need for a clear IT and
technology plan. - Developing better communications that simplify complex pension terms, provide regular updates on scheme performance, and ensure members understand their options and entitlements.
- TPR will now expand its engagement to the rest of the market by (a) inviting 10-15 of the largest commercial and non-commercial administrators to voluntarily collaborate with TPR and (b) using its learnings to adopt a light-touch approach with the rest of the market within the next 12 months. TPR will focus on:
- Financial sustainability.
- Risk and change management practices.
- Cyber resilience.
- Tech and innovation.
Action
No action required.
Issues affecting DB schemes
Funding and investment strategy – written statement
TPR has published the illustrative templates to be used when submitting the written statement of the funding and investment strategy. There are four templates:
- Schemes using the “Fast Track” route that have not reached the “relevant date”.
- Schemes using the “Fast Track” route that have reached the “relevant date”.
- Schemes using the “Bespoke” route that have not reached the “relevant date”.
- Schemes using the “Bespoke” route that have reached the “relevant date”.
TPR is setting up a new digital platform for submission of valuation-related materials, including the statement of strategy, but does not expect this to be available until next spring. Schemes should not submit their valuation materials until the digital platform is available. TPR has confirmed that it will not regard trustees as being in breach of the legislation if a delay in the launch of the digital system results in there being a gap between preparation of the funding and investment strategy and submission of the statement of strategy.
TPR has also published:
- Accompanying guidance to assist trustees in producing their funding and investment strategies and in completing the relevant statement of strategy template.
- An interim response to its consultation on the form of the statement of strategy. It will publish a full response this winter.
Action
Trustees of schemes with a valuation date on or after 22 September 2024 should ensure that they comply with the requirement to prepare a funding and investment strategy and to document it using one of the four templates. However, trustees should wait to submit the statement of strategy until TPR confirms that the digital platform is up and running.
Pension Protection Fund – 2025/26 levy
The Pension Protection Fund (PPF) is consulting on the rules for the 2025/26 levy. The levy estimate will be £100m, as in the 2024/25 levy year, which is the lowest levy the PPF believes it can charge under the current legislative framework while retaining the ability to increase the levy again in future years if necessary. The PPF will continue to engage with the government on legislative changes to enable it to reduce the levy further. The proposed changes to the levy rules are designed to:
- Maintain the levy at £100 million.
- Ensure the risk-based levy continues to be paid by a broad range of levy payers.
- Ensure the levy continues to be distributed in the most risk-reflective way possible.
The changes include:
- Simplification of the approach to deficit reduction certificates, including extending the simplest certification approach to all schemes and widening the definition of contributions that can be certified.
- Making it easier for schemes to take account of full buy-ins more accurately.
The impact of the changes on the individual levies payable by schemes is expected to be limited in most cases. The consultation closes on 23 October 2024.
Action
Trustees and employers of DB schemes should monitor the progress of the consultation.
Issues affecting DC schemes
Pension Wise – digital service
The Money and Pensions Service has launched Pension Wise Digital, a new digital appointment service that will sit alongside the existing Pension Wise telephone and face-to-face channels. It will offer customers the equivalent guidance as a telephone or face-to-face appointment, but through a new digital interface. As with the existing channels, Pension Wise Digital can be accessed by anyone aged 50 or over with DC benefits.
Action
Trustees and administrators of schemes providing DC benefits should consider whether any member communications should be updated to refer to the new digital service.
Value for members – enforcement
TPR has announced some of the outcomes of the initiative it launched last year to check that trustees are complying with the more detailed value for members (VFM) requirements that apply to schemes with less than £100 million in assets. Key outcomes include:
- 17% of the schemes that TPR engaged with as part of the initiative have concluded their schemes do not offer good value and have opted to wind up.
- TPR has issued seven penalty notices (totalling £19,250) and three improvement notices in relation to breaches of the more detailed VFM requirements and expects to issue further penalties as the initiative progresses.
In addition, TPR has published a blog post urging trustees of DC occupational pension schemes to respond to the Financial Conduct Authority’s consultation on the proposed new value for money framework. The post also:
- Encourages trustees of authorised DC master trusts to adopt the framework early to help TPR learn what works and what does not and to inform the legislative regime that will follow in the Pension Schemes Bill.
- Asks in particular for views on how best to measure quality of service.
Action
Trustees of DC schemes with less than £100 million in assets should ensure that they are complying with the more detailed VFM requirements.
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