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Pensions: DC trustee agenda update - June 2023

Welcome to our monthly update on current legal issues for trustees of DC pension schemes, designed to help you stay up to date with key developments between trustee meetings, and to support the legal update item on your next trustee agenda. We have a separate update for DB/hybrid schemes.

Spring budget

The Budget announced the abolition of the lifetime allowance (LTA). The LTA charge (the tax charge for exceeding the LTA) no longer applies from 6 April 2023 and the LTA will be removed from legislation by April 2024.

In addition, the annual allowance has increased from GBP40,000 to GBP60,000. The adjusted income threshold for the tapered annual allowance has increased from GBP240,000 to GBP260,000. The minimum tapered annual allowance and the money purchase annual allowance have each increased from GBP4,000 to GBP10,000 (read more).

The Bill making the 6 April 2023 changes is progressing through Parliament (read more). HMRC has published guidance covering the impact on: individuals with LTA protections (read more); entitlements to higher tax free lump sums (read more); and loss of LTA protections (read more).

ACTION: Expect enquiries from members; update administration; seek training/advice on other impacted areas e.g. lump sums and transfers; and consider communications.

Dashboards update UPDATED

The timetable for dashboards connection has been delayed (read more). TPR has updated its dashboards guidance, reflecting the finalised regulations and current standards (read more). PASA has published guidance on responding to member queries about dashboards (read more) and data matching (read more).

An Act preventing trustees from using pension scheme assets to indemnify themselves against penalties imposed by TPR for breach of the pensions dashboards requirements has received royal assent (read more). This is in line with existing provisions in relation to other penalties.

ACTION: Continue preparation for pensions dashboards, in line with the guidance. Seek advice on what liability protections are available to trustees and ways to mitigate risk.

TPR climate/ESG reporting reviews UPDATED

TPR has published a review of schemes’ annual climate reports, identifying common areas of improvement and points of good practice (read more). TPR expects schemes to take these observations into account when drafting reports. It has also announced initiatives checking trustee compliance with climate and environmental, social and governance (ESG) requirements (read more here and here).

ACTION: Take TPR’s report into account when preparing your scheme’s climate report.

TPR ED&I guidance

TPR has released guidance on improving equality, diversity and inclusion (ED&I) on scheme boards (read more). It gives practical steps for trustees and employers to address ED&I.

ACTION: Review the guidance and consider whether any actions are relevant to your scheme.

Scams guidance

The Pension Scams Industry Group has published an interim practitioners’ guide to combatting pension scams (read more). The guidance reflects the flag requirements introduced in November 2021 and discusses issues with those requirements.

ACTION: Check your processes against the guidance.

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