The Pensions Brief: December 2024 / January 2025

ISSUES AFFECTING ALL SCHEMES

PENSIONS DASHBOARDS – UPDATED AND NEW GUIDANCE

The Pensions Regulator (TPR) has updated its guidance on pensions dashboards to bring it in line with external developments and to address industry feedback.

In addition, the Pensions Dashboards Programme (PDP) has published guidance for schemes on how to obtain a registration code from their regulator (i.e. TPR for occupational pension schemes). Schemes need to obtain a registration code before applying to connect to the dashboards ecosystem.

The PDP has also published FAQs on the draft dashboards reporting standards that were published in November 2024. The FAQs cover:

• What the reporting standards cover.
• To whom the reporting standards apply.
• The changes made to the November 2022 draft of the reporting standards.
• What version of the reporting standards the industry should be working towards.
• Next steps.

Action

Trustees and administrators of schemes that are subject to the dashboards requirements should review the guidance and update their dashboards preparations as necessary.

PENSIONS OMBUDSMAN – OPERATING MODEL REVIEW

The Pensions Ombudsman (TPO) has published a blog post on implementation of the outcomes of its operating model review. The post notes that:

• Requiring all complainants to try resolving their complaint through their pension scheme's own internal dispute resolution procedure (IDRP) first, before they come to TPO, has already shown promising results in reducing unnecessary escalations.
• Launch of TPO’s expedited decision-making process has reduced the amount of time customers wait in TPO’s queues by as much as 18 months in many cases. While TPO does not publish its shorter form expedited determinations in the usual way, the post includes an example of a recent case to illustrate the process. In the future, TPO will also publish a periodic summary of the types of cases it has resolved using expedited decision-making.
• TPO has made progress in reducing the number of older and complex cases in its historical caseload by expanding its specialist working groups to include members of its legal team and upskilling adjudicators to enable them to deal with the most complex case topics.
• TPO is now using its “lead case” approach more than ever. When it identifies an industry-wide issue, or a scheme-specific issue affecting multiple members, it selects a representative “lead case” to accelerate through its processes. This allows TPO to set out its position clearly and quickly in a comprehensive determination, which in turn supports the timely resolution of other complaints.

The post also sets out what these changes mean for schemes:

• Schemes will need to ensure their IDRP is robust and well-communicated.
• Schemes’ signposting to TPO should be clear and up to date.
• If a scheme has an issue affecting multiple members, it should let TPO know at an early stage, and TPO will explore with the scheme whether a lead case approach is appropriate.

Action

Trustees and administrators should review the blog post and consider whether any changes are required to their IDRP-related processes and communications.

AUTUMN BUDGET – HMRC GUIDANCE

HMRC has published guidance on dealing with requests from scheme members who withdrew tax-free cash ahead of the Autumn Budget and now wish to pay the lump sum back into the scheme. The guidance also covers:

• Aspects of the recent clarificatory changes made to the legislation governing the abolition of the lifetime allowance and the new lump sum regime.
• The tax treatment of payments to trustees in bankruptcy.

Action

No action required, but trustees and administrators may find the guidance helpful.

DATA SCORING – INDUSTRY GUIDANCE

The Pensions Administration Standards Association has published guidance for schemes on data scoring. The guidance is designed to support schemes in achieving higher data standards while aligning with broader industry expectations. It highlights the importance of:

• Conducting relevant and targeted data testing to reflect true data quality.
• Building consistency across the industry to enable data comparison and better data quality understanding.
• Ensuring trustees can evidence data quality improvements and maintain transparency with rectification plans.
• Avoiding delays in data testing, even during ongoing rectification projects, to uphold accountability.

Action

No action required, but trustees and administrators may find the guidance helpful when considering their scheme’s data quality and how to improve it.

ISSUES AFFECTING DB SCHEMES

EMPLOYER COVENANT ASSESSMENT – UPDATED GUIDANCE

TPR has updated its guidance for trustees on employer covenant assessment to reflect the changes to the scheme funding regime that came into force in 2024. The guidance sets out how TPR expects trustees to approach covenant assessment, and covers the following areas:

• The role of the employer covenant and elements to consider when assessing it, including proportionality.
• Identifying scheme employers and assessing the nature and extent of their legal obligations to the scheme.
• Assessing the cash flow of employers, and non-employers, who have a legal obligation to financially support the scheme.
• Understanding the extent and duration of reliance that can be placed on employers to continue providing sufficient scheme support and the risks to that support deteriorating.
• Assessing the reliability period and covenant longevity (these are both new concepts introduced by TPR’s new DB funding code).
• Ascribing an appropriate value to a contingent asset and evidencing that it is sufficient to provide the specified level of support when required.
• Assessing the employer’s reasonable affordability for recovery plan purposes.
• Determining the appropriate covenant inputs needed to assess if the level of risk being run in the scheme’s funding and investment strategy can be supported by the covenant.
• Monitoring the covenant and creating a framework to take proportionate action at the appropriate time.

For more information, please see our legal update.

Action

Trustees of DB schemes should review the guidance and consider whether any changes are required to their covenant assessment and monitoring processes. Employers of DB schemes should also review the guidance.

PENSION PROTECTION FUND – 2025/26 LEVY DETERMINATION

The Pension Protection Fund (PPF) has announced that it will publish the 2025/26 levy determination in January 2025 to give it more time to decide whether it can reduce the levy further before any changes are made to the legislation governing the levy. The PPF has been working with the government on what the necessary legislative changes would be.

Action

Trustees and employers of DB schemes should monitor further announcements on the 2025/26 levy determination.

ISSUES AFFECTING DC SCHEMES

PENSIONS REVIEW – SECOND PHASE

According to press reports, the second phase of the government’s pensions review, which will look at the adequacy of retirement savings, has been delayed due to concerns around placing too much pressure on employers following the National Insurance increase announced in the Autumn Budget.

Action

Trustees and employers of DC schemes should monitor further announcements on the launch of the second phase of the review.

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