UK Public Service Pensions Update | December 2023

This month, the developments we consider include the results of the Pensions Regulator's (TPR) survey of public service pension schemes, updated TPR guidance on cyber security (including a new request to report incidents to TPR) and new guidance on pensions dashboards.

If you would like to discuss any of the items in this newsletter, please contact one of the experts listed at the end.

Autumn Statement | Finance Bill

The Finance Bill 2023-24 has been introduced to Parliament and started its second reading in the House of Commons on 13 December. For pensions, the key parts are clause 14 and schedule 9 (abolition of the Lifetime Allowance from April 2024) and clause 15 (tax treatment of McCloud-related adjustments for members of the Parliamentary Contributory Pension Fund, Senedd Pension Scheme and Assembly Members’ Pension Scheme). Funds might also be interested to read HMRC pension schemes newsletter 154, published after the Autumn Statement.

2020 valuation | Police pension schemes

The Government Actuary's Department has published the valuation of the Police Pension Schemes (England and Wales) as at 31 March 2020. The key conclusion is that there is no breach of the cost control mechanism and so no need for the home secretary to consult on changes to the scheme. The core cost cap cost of the scheme fell below the cost-cap floor, but the economic-cost cap cost of the scheme did not.

The Pensions Regulator | Public service pension scheme survey results

The Pensions Regulator (TPR) has published the results of its Public Service Pension Scheme Governance and Administration Survey 2022-23. Funds might like to read the results and think about any areas where they are weaker. The Pensions Regulator uses the survey to get "a regular assessment of performance, understand barriers to improvement, and delve deeper into the top risks facing public service schemes."

TPR | Updated cyber security guidance

TPR has published updated cyber security guidance. Among other things, the guidance now asks "schemes, their advisers and providers to report significant cyber incidents to [TPR] on a voluntary basis, in an open and co-operative way, as soon as reasonably practicable". This would be in addition to lodging a breach of law report if one is needed and complying with other reporting requirements.

Cyber risk continues to rise. All funds should review the updated guidance and consider, with their advisers, what actions they need to take to improve cyber security and resilience.

Pensions dashboards | New guidance

The Pensions Administration Standards Association has released new pensions dashboards readiness guidance, along with a call to action setting out the top five actions schemes need to take now in relation to dashboard connection readiness. The new resources come with a warning that "with a finite set of resources, the industry as a whole can’t continue to delay [dashboard readiness] activity if universal connection by 31 October 2026 is to be achieved."

Funds should consider this guidance. Local Government Pension Scheme (LGPS) funds might like to consider it in conjunction with the draft guide for LGPS administering authorities published by the Local Government Association (please see our November newsletter).

Upcoming changes | Update on timings

The Financial Services Regulatory Initiatives Forum (which includes the Pensions Regulator, Financial Conduct Authority and others) has published the latest edition of its regulatory initiatives grid. The section on pensions and retirement income starts at page 45. Funds might like to note that:

• the Pensions Regulator's new general code of practice is "expected to be in force in April 2024, subject to parliamentary timetable";
• "[n]o milestones" have been included for the planned changes to the notifiable events regime "due to significant uncertainty around delivery";
• The new scheme funding regulations for private sector schemes are "expected to be laid in parliament Q1 2024" and the new DB funding code is "expected to be in force Q2 2024. All subject to parliamentary timetable".

It has been reported, separately, that the Pensions Regulator expects the new private sector DB scheme funding regulations to be introduced to Parliament in the new year, be in force by April 2024 and be effective for schemes with valuations from autumn 2024. The new DB funding code would be released to support this timetable.

The Pensions Regulator has also noted the current position with the notifiable events changes but confirmed its expectations in the context of mergers and acquisitions activity.

House of Commons Library briefing papers | New and updated

The House of Commons library has published or updated the following briefing papers, which might be of interest to public service pension schemes and employers:

• Pensions tax relief: the annual allowance and the lifetime allowance.
• Autumn Statement 2023 and Finance Bill 2023-24.
• Automatic enrolment: current issues.
• National Insurance Contributions (Reduction in Rates) Bill 2023-24.

This newsletter covers developments relating to public service pensions in England and Wales, with a focus on the Local Government Pension Scheme.