Pensions Weekly Update – 18 December 2024

Authors:

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 Pension Protection Fund (PPF) usually publishes its levy determination and rules during December, for the following levy year. However, the PPF has announced that it will delay its levy decision for the 2025-26 year until the end of January 2025. Legislation currently prevents the PPF from increasing the levy year on year by more than 25%. The PPF has previously said that it would not set the levy at zero because it could not then raise a levy in future years. The PPF has been discussing legislative change with the Department for Work and Pensions. The PPF says that it has been carefully considering all options, including reducing the levy further before any legislative change. It is looking hopeful that there might be some good news for pension schemes in the new year.
There have been various reports in the pensions and mainstream press that the chancellor has put on hold the second phase of the government’s pension review, which was to review pensions adequacy, amid concerns that increasing automatic enrolment contributions at this time would put extra strain on businesses following tax rises in the autumn budget.
The Financial Conduct Authority (FCA), Information Commissioner’s Office (ICO) and The Pensions Regulator (TPR) have published a joint statement designed to provide additional clarity around which types of communications to pension scheme members, in particular, are unlikely to be caught by direct marketing requirements that would necessitate certain conditions to be met before being sent.
The FCA has issued a discussion paper raising questions on how it should adapt its requirements in a changing pensions market. The FCA is inviting comment on a number of issues, including DC transfer processes.
The FCA has published its perimeter report, in which it notes that under the previous government, HM Treasury had planned to consult to bring investment consultancy services into its perimeter. However, the Treasury put this work on hold due to other priorities. The FCA says that it continues to support investment consultancy services being brought into its perimeter as and when the government is ready to do so.
TPR has published its annual report and accounts for 2023-24. TPR met, or almost met, 18 of its 20 key performance indicators (KPI). It was not able to meet the KPI on implementing new elements of the Pension Schemes Act 2021 relating to notifiable events (as we are still waiting for a government response to consultation on the underlying regulations), or the KPI relating to the high engagement of its (almost) 1,000 employees in what TPR describes as a “challenging year”.
TPR’s annual report on the occupational defined benefit (DB) and hybrid landscape in the UK highlights a reduction in the number of schemes from 7,300 in 2012 to 5,190 in 2024. Membership in private DB and hybrid schemes has fallen by 2% in the last year, to 9,424,000.
Under growing pressure to tackle high net migration figures, the Home Office has published plans to clamp down on visa abuse and exploitation, to be implemented through amendments to the Employment Rights Bill. These are aimed at “rogue” employers (particularly within the care sector) but are likely to affect any UK employer with a licence to sponsor overseas workers. A blog post by Annabel Mace and May Cheung provides more information.
Rachael Markham in our Restructuring & Insolvency team has published blog posts on determining the date on which a winding up petition is presented and when a UK court is likely to agree to a long administration extension.
Have you entered our pensions festive quiz? If not, you have until 5 p.m. today to submit your entry. Good luck!
We will be taking a break over the festive period, and will return in January. We wish all of our readers a great festive break and a happy and healthy new year!