Pensions: what's new this week - 19 June 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: TPR promotes dashboards data preparation; TPR updates active member discounts guidance; TPR publishes 2023 annual funding statement analysis.
TPR promotes dashboards data preparation
The Pensions Regulator (TPR) has published a blog post encouraging schemes to prepare for the arrival of pensions dashboards, in particular focusing on data readiness. This follows the recent announcement (with accompanying regulations) that the pensions dashboards connection deadline will now be 31 October 2026, with a staging timeline for connection to be set out in guidance, rather than legislation (read more).
TPR expects trustees to audit the data that will be needed to match savers to their pension records and the data that will have to be sent for savers to view through the dashboards, to determine whether it is in a dashboard ready format and how systems will access and provide the necessary information. The blog post highlights concerns over industry capacity; TPR expects all trustees and scheme managers to be getting to grips with their member data now to avoid competing demands, and urges them to work with administrators to assess how much they can frontload.
TPR has also updated its initial dashboards guidance to reflect the new connection timetable.
TPR updates active member discounts guidance
TPR has updated its guidance on providing value for DC scheme members to give extra detail on identifying active member discounts. Active member discounts, meaning applying lower charges to active members than others, have been banned since 2016. A new paragraph has been added to the guidance clarifying that the existence of an active member discount needs to be checked at an individual member level, as opposed to a cohort level; trustees need to be satisfied that there is no individual member affected by an active member discount. It also makes it clear that this is an ongoing obligation and active member discounts cannot occur at any time.
TPR publishes 2023 annual funding statement analysis
TPR has published analysis of the expected positions of DB pension schemes with valuation dates between 22 September 2022 and 21 September 2023 (known as Tranche 18), giving context to the annual funding statement published at the end of April (read more).
Following the approach taken since 2021, TPR has excluded trends in employer affordability from this year’s analysis. This is due to the impact of COVID-19, Russia’s invasion of Ukraine and higher interest rates, meaning analysis based on historic data is likely to be of limited use. TPR notes that the impact of these economic factors on employer covenants should be reflected when calculating schemes’ technical provisions.
Overall, the modelling suggests that, in aggregate, schemes undertaking valuations at 31 December 2022 and 31 March 2023 will show improved funding levels from those reported three years previously and the current recovery plan will be on track to remove the deficit by the end date.