Pensions Weekly Update – 30 March 2022

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Here is our weekly summary of key legal and regulatory developments relevant to occupational pension schemes, which you might have missed, with links for further information.

On 23 March 2022, the Chancellor gave his Spring Statement 2022. There is not much to report from a pensions perspective. The background papers make reference to ongoing reform of the pensions charge cap in order to unlock institutional capital into illiquid assets (and the government has today issued a further consultation on this topic). The papers also note that the government intends to reduce the basic rate of tax to 19% before 2024 (which would obviously impact the amount of tax relief on pension contributions). There was no mention of the state pension triple lock during the Chancellor's statement, but in a parliamentary debate held on 22 March 2022, Thérèse Coffey confirmed that the triple lock would be honoured in the future.
The administration sub-group of the PASA-led guaranteed minimum pension (GMP) Equalisation Working Group has published a series of frequently asked questions, together with comments on those FAQs. The document is designed to help administrators implement GMP equalisation by providing “pragmatic guidance on good practice”, based on the collective view of the sub-group. The topics covered range from the PAYE tax considerations that apply to the payment of arrears and interest, to how to implement GMP equalisation where the scheme member has died.
The Department for Work and Pensions has published an update on the progress that it made between 11 January 2021 and 28 February 2022 identifying underpayments in state pension. Underpayments have arisen as a result of a failure to apply increases to the state pension of some individuals. During the period, the checking process identified 14,239 underpayments with a total amount owed of £94.3 million. The update notes that in some cases, individuals did not lose out because there was a resulting pension credit, meaning that there was no net underpayment.
The Office for National Statistics (ONS) has released its quarterly estimate of membership, income and expenditure, etc. in relation to UK-funded occupational pension schemes. It covers the period July to September 2021. The bulletin has been restructured and splits out information relating to (1) private sector defined contribution schemes, (2) private sector defined benefit and hybrid schemes and (3) public sector defined benefit and hybrid schemes. The ONS notes that during quarter 3 of 2021, the market value of pension funds was £2.5 trillion and that private sector defined benefit and hybrid pooled investment holdings totalled £761 billion.

If you would like specific advice on any of these issues, or on anything else, please contact a member of our Pensions team.