Now that the end of year celebrations have finished and the brain cells are more or less working. Here is our final newsletter of the year.
Autumn Statement – Lots to consider: The Chancellor’s recent Autumn Statement was packed with pensions proposals and promised future consultations. Read more on some of the impact for DB pension schemes in our Autumn Statement Special.
On the DC side, the Chancellor plans to introduce multiple automated consolidators for DC pots worth less than £1,000. He also announced a consultation on a DC ‘pot for life’ which could give employees the right to require a new employer to pay into an existing pension account. The drive towards DC consolidation will continue and trustees of occupational DC schemes may have to offer decumulation services and products.
New Pensions Minister: After just over a year as Pensions Minister, Laura Trott, has been promoted to the position of Chief Secretary to the Treasury. Ms Trott has been replaced by Paul Maynard, the MP for Blackpool North and Cleveleys.
Pension tax – Changes from April 2024: As the Lifetime Allowance (LTA) regime is phased out, two new tax-free allowances emerge: the “lump sum allowance” and the “lump sum and death benefit allowance.” Benefits surpassing these limits will be taxed at an individual’s marginal rate (rather than being subject to an unauthorised payment charge as is currently the case). Noteworthy details include a frozen standard lump sum allowance at £268,275, and a standard “lump sum and death benefit allowance” set at £1,073,100. Additionally, those with LTA protection will retain higher allowances.
TPR will not force scheme to buy-out: During a Work and Pensions Committee hearing, TPR’s Louise Davey emphasized that, while buyout is an option, it is not the sole path for securing benefits. TPR said it supports alternatives, including consolidation and maintaining schemes, provided there’s a robust employer covenant. This echoes more recent Government commentary since the Mansion House reforms speech earlier in the year which aimed to unlock pension assets from gilts and bonds into more productive asset classes that could help the UK economy to prosper.
Pension Scams – TPR urges action: TPR has noted that ‘only’ 35 reports of pension fraud were made, on average each month last year. Clearly believing the incidence of fraud to be under-reported, TPR has encouraged Trustees and administrators to report actual and suspected scams. TPR’s guidance on reporting scams can be found here: Avoid and report pension scams | The Pensions Regulator. Having taken the ‘pension scams pledge’ Atkin Pensions is committed to identifying warning signs, reporting scams and protecting the savings of the scheme members we look after. We believe that the more sophisticated and rigorous approach to identifying possible pension fraud will have reduced the frequency in which it occurs and therefore some of TPR concerns might be unfounded.
Pension Consolidator – First transaction announced: Following its launch in 2017 and it completion of TPR’s assessment for superfunds in 2021, Clara Pensions has carried out its first transaction. Member of the Sears Retail Pension Scheme were transferred to Clara Pensions at the end of November. Clara is reported to be providing £30m of new capital to support the Scheme.