Atkin pensions & Trustees July newsletter

PPF – Treasury considers extending scope:   

The UK Treasury is contemplating expanding the role of the Pension Protection Fund (PPF), which provides a safety net for underfunded defined benefit (DB) schemes when sponsoring employers fail. Under new proposals, the PPF may also take over smaller poorly performing DB schemes upon request. This idea is discussed in a recent report by the Tony Blair Institute for Global Change. This development aligns with a recommendation from the PPF departmental review published last December, recognizing the PPF’s substantial reserves and considering their utilization. Moreover, the Pensions Regulator has long advocated for consolidation of smaller DB schemes. This proposal could lead to the transfer of “tens of billions” of pounds to the PPF. Legislative changes could grant the Treasury influence over asset allocation, potentially unlocking significant funds for investment in the UK and the transition to a greener economy. It will be interesting to see if this idea is developed and what ‘moral hazard’ provisions are considered to prevent employers dumping their schemes on the PPF.

New TPR CEO gives call for action:   

The Pensions Regulator (TPR) has made a bold call to action, urging the pensions industry to collaborate in improving the pension system, fostering innovation for the benefit of savers, and safeguarding their hard-earned money. Nausicaa Delfas, the new CEO of TPR, emphasizes the importance of value for money and vows to actively pursue the consolidation of underperforming schemes. Highlighting the significance of trustee board governance, Delfas asserts, “To fulfill our ambitions, we firmly believe that every trustee body must include a professional standards-qualified individual.”  The full speech can be read here:  Nausicaa Delfas Speech

Capita Cyber Security Incident – TPR comments:   

The Pensions Regulator (TPR) has highlighted the criticality of implementing strong cyber security measures and business continuity plans in light of recent events involving Capita, which suffered a cyber security incident resulting in data exfiltration from its servers. According to the ICO, around 90 organisations have reported Capita data breaches. TPR has urged trustees of schemes associated with Capita to collaborate with the company to assess the impact on their schemes, fulfill their obligations as data controllers, and inform members about the risks of scams and protective measures. TPR is actively engaged with trustees, regulators, and Capita to address the situation. Stressing the significance of robust internal controls, TPR advises scheme trustees to refer to their cyber security guidance to ensure the adequacy of their own cyber security plans.

Budget changes to LTA & AA – Finance Bill progresses:   

The Finance (No.2) Bill, which is currently progressing through Parliament, will implement measures announced during the Spring Budget. While not yet in force, the Bill will have retrospective effect. One notable change relates to the annual allowance (AA), which sets limits on tax-relieved pension savings. Effective from 6 April 2023, the Bill proposes several adjustments: raising the standard AA from £40,000 to £60,000, increasing the money purchase AA from £4,000 to £10,000, raising the minimum tapered AA to £10,000, and adjusting the threshold at which the taper applies to £260,000. With effect from 6th April 2023, the Bill will also remove the LTA charge.

HMRC Newsletter – Lump sum death benefits:   

In a recent update, HMRC Newsletter 149 clarifies that the tax liability on lump sum death benefits from defined benefit (DB) schemes and uncrystallised funds will continue to be the responsibility of the deceased member’s legal personal representative. This information,  deviates from HMRC’s initial indication that scheme administrators would assume the responsibility for determining tax following the removal of the lifetime allowance charge in the Spring Budget. For more details, refer to HMRC Newsletter 149

TPR is moving:  

From 19th June, TPR’s postal address will be Telecom House, 125-135 Preston Road, Brighton BN1 6AF.

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