Current Issues – June 2021

Pension Tax Reform – Will changes be made? There are reports that changes might be made to pensions tax relief which, for existing DB schemes, could translate into members taking their benefits earlier/later or in a different way to how they take them now. At the moment, these are only reports but, given the massive increase in government borrowing during the pandemic, it would appear to only be a matter of time before some changes are made.

TPR data shows rise in use of professional trustees: More and more schemes are turning to professional trustees to either solve issues with recruiting new trustees or to help existing trustees in their decision making. This is before the introduction of the Pensions Act 2021 which significantly increases some of the penalties that Trustees might be exposed to. Our professional trustees are seeing particularly strong growth in smaller schemes where a good professional trustee can help manage the increasing governance and advisor costs.

Contribution Notices – Consultation by TPR: Under the Pension Schemes Act 2021, TPR will be able to apply two new tests when considering whether to impose a contribution notice. To reduce the probability of a Notice being issued, Trustees (and their sponsors) should make sure that they understand in what situations these tests might apply and what steps can be taken to mitigate the risks. The Draft Code governing these new tests is under consultation which includes examples of actions that may fall foul of the new tests.

Pension Dashboard – Staging timetable: The first wave, made up of the largest schemes, will start in April 2023 with the largest DB schemes expected to begin their staging from late 2023. Trustees should understand from their advisors what work will be involved in providing information to the dashboard providers although the precise requirements will become clearer as the staging timetable draws closer and the first schemes start the process.

Money and Pensions Service – Rebrand: The Money and Pensions Service is to be rebranded as MoneyHelper from the end of June. Trustees will need to update their member communications in due course and to highlight the new website.