Current Issues December 2024

TPR – Scheme Returns 2025:  The Pensions Regulator (TPR) will issue scheme return notices for defined benefit (DB) and hybrid schemes from early February 2025. Trustees must complete the returns via TPR’s Exchange system by midnight on 31 March 2025.

There will be some changes to the information requested, including;

• The “Record Keeping” section will be renamed “Scheme Member Data Quality” and updated to align more closely with TPR’s expectations and the general code of practice.
• The “Investment Services” section will feature new questions about the objectives set for investment consultancy providers. Trustees will need to confirm if they have reviewed the provider’s performance against these objectives and whether the objectives themselves have been reviewed.

Trustees should ensure they are prepared for these updates ahead of the submission deadline.

Pension Revaluation – Statutory rates confirmed:  The Occupational Pensions (Revaluation) Order 2024 sets deferred pension revaluation factors, capped at 2.5% or 5.0% annually, or inflation (CPI) since September 2011. This year’s one-year revaluation factor is 1.7%, affecting minimum Limited Price Indexation increases for DB schemes.

DB Funding – Final version of Fast-Track tests:  The Pensions Regulator (TPR) has released a standalone final version of its Fast Track tests and conditions, refining the content previously included as an appendix to its consultation response. Minor adjustments have been made to enhance clarity and align with industry feedback. Key updates include clearer wording on low dependency funding bases, recovery plans, and scheme actuary confirmations. These changes aim to provide greater context and flexibility while maintaining regulatory intentions.

For details, read the final document here.

Chancellor’s Manion House Speech:  In her Mansion House speech, Chancellor Rachel Reeves outlined plans to boost UK growth by pooling pension assets. The Local Government Pension Scheme’s 86 funds will merge into a few “megafunds,” unlocking £80 billion for investment in UK infrastructure and startups. Regulatory barriers will also be reduced to encourage growth. 

A report following the speech also confirmed that the Government believes that the future of workplace contract based DC lies in fewer, bigger, better run schemes with the capability to invest in assets classes such as private equity and infrastructure. The Chancellor also launched a consultation on reforms for defined contribution (DC) schemes. Key proposals include a minimum size for default fund assets (£25-50 billion) to unlock scale benefits and limiting the number of default arrangements. The government aims to consolidate the market, reducing the current number of providers to fewer, larger schemes by 2030. Proposals also include enabling transfers without member consent and considering a legal duty for employers to review workplace pensions for value. The consultation closes on 16 January 2025.