Pensions Weekly Update – 4 October 2023

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

The Pensions Regulator (TPR) has published its compliance and enforcement bulletin for the period of January 2023 to June 2023. This notes that it published one regulatory intervention report during the period. The regulatory intervention report relates to a failure to publish a scheme's climate change report (often referred to as the TCFD report) and represents the first fine of its kind issued by TPR. The largest occupational pension schemes (those with over £1 billion or more in assets, authorised master trusts and authorised collective defined contribution schemes) are required to produce and disclose a TCFD report within seven months of the end of a scheme year. Failure to comply with the requirement to correctly publish a TCFD report on time carries a mandatory penalty, with a minimum of £2,500. The maximum penalty is £5,000 where a trustee is an individual, or £50,000 where the trustee is a corporate body. In this particular case, the scheme administrators said that they uploaded the TCFD report before the deadline, but a faulty URL meant that it could not be located by TPR. The trustee was fined £5,000. The level of fine took into account the fact that the trustee was a corporate trustee.
TPR has previously said that it will be doing spot checks this autumn on schemes that are required to produce implementation statements, to check the contents of those reports. Trustees should carry out checks to ensure that they can locate their own scheme's implementation statement online via an internet search engine and that it is the most recent version. For example, schemes with a 31 March year-end should have an implementation statement as of 31 March 2023 publicly available by the end of this month.
The Department for Work and Pensions (DWP) is carrying out a consultation on the general levy for 2024-25, 2025-26 and 2026-27. The general levy is payable annually by tax registerable occupational and personal pension schemes to cover the funding provided by the DWP in respect of the core activities of TPR, The Pensions Ombudsman and the pensions-related activities of the Money and Pensions Service. The amount payable by each scheme depends on membership numbers and scheme type. Three options are put forward for consultation. The first option is to leave the levy rates unchanged (but the DWP estimates that this would result in a deficit of more than £200 million by 2031 and this would need to be addressed in future years). The second option is to increase the levy rate by 6.5% for all schemes. The third option (which is the DWP’s preferred option) is to increase the levy by 4% for all schemes apart from small schemes with fewer than 10,000 members: these would pay a premium of £10,000 from April 2026. The DWP says, “this option would support wider government initiatives to encourage a cultural shift across the pensions market from focusing on cost to overall value and encouraging market consolidation … Introducing the premium payment in 2026 allows smaller schemes time to adapt and consolidate, giving two years to consider whether this is in their members’ interests.” Consultation closes on 13 November 2023.
Our Autumn Hot Topics in Pensions was published last week. This two-page summary of current pensions issues is packed full of news and information.
Look out for the next in our Pensions Life Hacks series: our next factsheet will offer tips on data protection impact assessments.

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