February 2023 Newsletter

Current Issues –         

TPR – Scheme Return 2023:   TPR has started to issue Scheme Returns for 2023.  Most schemes will receive the scheme return in two parts.  Part 1 will be an e-mail with a link to an online questionnaire. Part 2 must be completed on Exchange as normal.    The returns must be completed by 31^st March.  

LDI – Bank of England comments:   In a hearing held by the House of Commons Work and Pensions Committee (WPC), the Bank of England (BoE) highlighted three main causes of the stress seen in markets following the spike in government bond yields after the ‘mini-budget’ of September 2022.  These were, the unprecedented speed and scale of the move in rates, lack of liquidity resilience among LDI funds and, thirdly, pooled LDI fund structures.  The BoE noted that schemes which hold LDI in a pooled fund had to sell other assets to meet liquidity calls, which took time.  Some schemes found themselves as ‘forced sellers’ in a declining market, leading to a self-perpetuating spiral.  Many small schemes would have had procedures in place to meet collateral calls via an agreed ‘waterfall’ specifying the other investments from which disinvestments would be made automatically. In these cases, collateral calls were made on time and the level of hedging was maintained.  It is possible that having funds which were only weekly dealt will also have caused issues.

HMRC Newsletter:   HMRC has issued pension newsletter 146, which covers topics such as the long transition from Pensions Schemes Online (PSO) to Managing Pension Schemes (MPS).  From April this year, ‘event reports’ for the tax year 2023/24 must be submitted on MPS.  Reports for earlier tax years can still be reported on PSO.  From 2024, MPS can be used to submit a pension scheme return (if requested by HMRC), until then, HMRC scheme returns should be submitted on PSO.

PPF Levy – Deadlines:   Schemes need to be aware of the deadlines for making submissions to TPR for this year’s risk-based levy.  Contingent asset certificates must be sent to TPR by 31^st March.  Any hard-copy documents needed to support the contingent assets and guarantor strength reports must be e-mailed to TPR by 3^rd April.  Deficit Reduction Contribution certifications (for payments made on or before 31^st March) must be entered on TPR Exchange by 28^th April. Invoices will start to be issued in the autumn.

Mortality Projections – Delay announced:   The Continuous Mortality Investigation (CMI) which publishes the projections widely used by pension schemes when choosing life-expectancy assumptions has confirmed that the 2022 version of their model will be published slightly later this year in June.  The main reason for this is to allow for revised population data following the 2021 Census.  The core CMI_2020 and CMI_2021 models put no weight on the higher rates of mortality experienced in those years as a result of the Covid pandemic.  However, the CMI says that it intends to place some weight on increased mortality for 2022 in the forthcoming model. 

Pension Scams – TPR clarifies MoneyHelper requirement for transfers:   TPR has updated its guidance on dealing with transfer requests to clarify that members directed to speak to MoneyHelper must seek Pension Safeguarding Guidance, rather than general guidance for the over 50s.  Where there are ‘Amber Flags’, members must be directed to make a Pension Safeguarding Guidance appointment via 0800 015 4906 or https://www.moneyhelper.org.uk/pension-safeguarding