Pensions: what's new this week - 17 April 2023
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Welcome to your weekly update from the Allen & Overy Pensions team, covering all the latest legal and regulatory developments in the world of workplace pensions.
This week we cover topics including: Spring Budget tax changes: further HMRC guidance; Government Green Finance Strategy; PASA eAdmin engagement guide; Change to PSC reporting duties; The Gender Pensions Gap: what it is and how to fix it – 23 May 2023.
Spring Budget tax changes: further HMRC guidance
HMRC has published two new pieces of guidance in relation to the pensions tax changes announced in the Spring Budget. The first explains the position from 5 April 2023 on entitlements to higher tax free lump sums where individuals have lifetime allowance (LTA) and, in some cases, lump sum protections. The second sets out how LTA protections can now be lost, reflecting the changes announced in the Budget: after 5 April 2023, individuals who successfully applied for protections before 15 March 2023 will be able to make new pension savings and transfers without losing their protection. General updates have also been made to HMRC’s existing pension scheme administration guidance to reflect the Spring Budget changes, such as the abolition of the LTA charge and increased annual allowance entitlements.
Separately, HMRC has communicated to an industry group that changes announced in its 27 March 2023 LTA newsletter to the way that defined benefits lump sum death benefits and uncrystallised funds lump sum death benefits are paid (read more) will not go ahead; schemes can continue to use the current process for taxation of those payments. Further guidance will be provided in a future HMRC newsletter.
Read the text of HMRC’s letter on the ACA website.
Government Green Finance Strategy
The Government has published a Finance Strategy for ‘mobilising green investment’. In relation to the role of pension schemes, the strategy outlines a number of existing initiatives aimed at encouraging green investment (such as TCFD reporting and recent regulations allowing schemes to omit performance-related fees from their DC charge cap calculation), as well as some upcoming developments. These include proposals to review the regulatory framework on effective stewardship and current guidance around consideration of financial and non-financial factors in fiduciary duties in late 2023, with industry engagement in advance of this. The Pensions Regulator (TPR), in a joint statement with other regulators, has welcomed the updated strategy and said that it will continue to work closely with the government and other financial regulators to ensure that they are joined-up in their efforts to address these challenges for pension schemes.
PASA eAdmin engagement guide
The Pensions Administration Standards Association (PASA) has published a guide on how schemes should encourage members to engage with their pension saving through digital strategies. The guide sets out six key areas for consideration: creating an emotional connection; being creative in how information is presented; ensuring information is relevant and current; making communications inclusive and accessible; making it easy for members to engage; and continuing to measure the success of, and develop, the strategy. A list of example actions, divided into ‘minimum’ and ‘optimum’ approaches, is provided for each area along with a template RAG (red/amber/green) assessment.
Change to PSC reporting duties
Most UK companies (including corporate trustees) are required to maintain a register of persons with significant control (PSC) over the company and to file a copy at Companies House each year. They must report where there is a material discrepancy between the information they hold about a PSC and the information recorded by Companies House. This requirement has been amended so that a material discrepancy only needs to be reported if it can reasonably be considered to be linked to money laundering, terrorist financing or concealing details of the business of the customer. The government has updated its guidance on discrepancy reporting to reflect this.
The Gender Pensions Gap: what it is and how to fix it – 23 May 2023
The Gender Pensions Gap – the difference between the pension incomes that men and women can expect at retirement – is estimated to be twice the size of the Gender Pay Gap. Why is that, and how can we close the gap? Join us at our offices on Tuesday 23 May 2023 when we will be welcoming Legal & General Investment Management’s (LGIM) Stuart Murphy, Co-Head of DC, and Alexandra Miles, Senior DC strategist, to discuss the gap and what can be done to address it.