The Budget – Big changes announced: Increases to the Lifetime Allowance (LTA) and Annual Allowance (AA) had been rumoured, but during his Budget speech on 15th March, the Chancellor announced the LTA charge will be removed from April 2023 and the LTA itself will be abolished entirely from April 2024. The AA is rising from £40,000 to £60,000 and the Money Purchase Annual Allowance (which restricts the amount that people already drawing on their pensions can contribute) will go up from £4,000 to £10,000. For anyone without existing protections to their pension, the maximum tax-free lump-sum on retirement will remain at £268,275 (25% of the current LTA) and will be frozen at this level. Lump sums for amounts previously above the Lifetime Allowance that were subject to a 55% tax charge will, from 6 April 2023, be taxed at the recipient’s marginal rate. The Government is hoping that these moves will encourage people, particularly doctors, to remain in work.
Pension Scams – Trustees asked to report to FCA: Pension Trustees have been asked by the Financial Conduct Authority to report concerns they may have about transfer requests, including unauthorised advisers, members offered incentives, schemes with high-risk or unregulated investments, schemes with high or opaque charges, and an increase in the number of transfers advised by the same firm, amongst others. Trustees are asked to provide information to the FCA using specified e-mail addresses, which can be found here: FCA: Reporting pension transfer concerns
Pensions Dashboards – Delayed: Pensions Minister, Laura Trott, announced on 2nd March that the dashboard programme will be delayed as additional time is needed for the digital architecture. This recognises the significant technical issues in connecting a large range of IT systems to the dashboard program by the original deadlines. Ms Trott stated that the DWP will play a leading role in the reset of the Pensions Dashboard Programme. DWP is expected to legislate to amend the timing of the dashboard obligations to give clarity to schemes. The Pensions Minister has said she will provide a further update to the House of Commons before the summer recess.
Buy-out – Guidance on data: With more schemes reaching a position where they can consider buy-out, PASA has issued some useful guidance on being data-ready for buy-ins and buy-out. The guidance highlights the data that will be required before approaching insurance providers and the actions trustees can take to deal with gaps, benefit audits and risks associated with bulk-exercises. The guidance can be found here: PASA: Data readiness for buy-out guidance
Professional Trustee Consolidation: February saw the conclusion of deals which have created some very large professional trustee companies. Ross Trustees merged with Independent Trustee Services to form a new business called Independent Governance Group. The combined business has 120 employees, over 400 appointments and around £350billion of assets under governance. At the end of the month, 20:20 Trustees merged with Punter Southall Governance Services to form a new business called Vidett, which will have over 475 clients and assets of around £140billion under governance.
Auto-Enrolment – DWP backs expansion: A private members bill put forward in Parliament has secured the backing of the government. The bill seeks to abolish the lower earnings limit for contributions and to reduce the age of automatic enrolment to 18. If brought into law, more low earners and young people will be brought under the umbrella of auto-enrolment.
TPR – Review Announced: The DWP has appointed Mary Starks to carry out a review of the Pensions Regulator, which is in line with the expectation that all public bodies are reviewed by each Parliament. The review will look at how TPR is performing, where it can improve and how greater efficiency and value can be provided to taxpayers. Mary Starks has experience from previous senior positions at the FCA and Ofgem.