Pensions Update | September 2022

In this article, Eve Wallace our pensions expert looks at pension legal updates and matters over the past few months.

Eve has recently joined the firm and is based-in our Bristol office, she has spent many years advising on pensions issues. Eve's breadth of knowledge will strengthen our existing pensions law capability, and she will work closely with Claire Holland and Lowenna Carlson to continue delivering practical solutions for our clients around pensions issues.

Over the summer, The Pensions Regulator announced that it would be increasing its focus on the prevention of pensions scams following an estimate that almost £2.5 trillion of the nation's pension savings are accessible to scammers.  Whilst the immediate concern is that the cost-of-living crisis could lead to savers withdrawing their pension savings in order to meet energy and other household expenses – already a target of scammers – the Regulator also has a longer term focus on improving education and awareness, involving employers in the fight against scams.  Further detail on this will follow, as the Regulator broadens its existing anti-scams toolkit.

Continuing on the theme of education, we can also expect to see the Regulator encouraging more focus on employee awareness through its joint work with the Financial Conduct Authority on the 'pensions consumer journey'. Following a call for input from the industry, the jointly published Feedback Statement shows that the Regulator has firmly set its sights on finding ways to promote better employee engagement so that they can make better informed decisions, leading to better savings outcomes. 

First steps will include publicising 'Midlife MOT' toolkits for employers (and encouraging pension scheme providers to support employers in this area), working with the Money and Pensions Service to help employers to support employees coming back into the workplace and a review of the Defined Contribution regulatory guidance dealing with member communications.  Again, we’ll return to this topic when further details are available as employers may need to make some changes to existing processes.

Finally, the long-awaited Collective Defined Contribution pension scheme is (finally!) here.  Following a model widely used in the Netherlands, these schemes offer an alternative to the traditional model of pension scheme where risk is largely borne either by the employer (DB pension schemes) or the member (DC pension schemes). 

CDC schemes will see fixed employer contributions into a collectively held asset pool, which will be used to provide a pension (rather than a 'pot' of savings) to the member at retirement.  A drop in the scheme's funding level will see a reduction in member pension, rather than increased employer contributions.  This model is currently only available to single employer group companies, but there is enabling legislation in place to allow non-associated employers to establish CDC schemes in future.  At the moment these pension arrangements are only attractive to larger employers due to set up and running costs, but this could change with the advent of multi-employer CDC arrangements.  The Royal Mail is expected to be one of the first employers to establish a CDC scheme. 

To finish off, here are a few upcoming events in pensions:

  • From October 2022, members in automatic enrolment schemes will receive a simpler (maximum two sides of A4 paper) annual benefit statement.  This is part of a drive to make pensions simpler to understand and to improve member engagement.  (These statements will be provided by the pension scheme.)
  • Pensions Dashboards are coming!  There is a lot of work underway to allow pension scheme members to access information on their pension savings (including their state pension) all in one place, online – the pensions dashboard.  At the moment the emphasis is on the Trustees of pension schemes to get ready to share information with dashboard platforms.  Employers may have a role in ensuring that all data provided to their pension scheme provider is up to date and 'clean'.  We don't yet have a date for when the first dashboards will be available to members, but sharing of information between the pension scheme and dashboard platforms could start as soon as summer 2023.
  • Value for Money in Defined Contribution Pension Schemes.  The Pensions Regulator, the Department for Work and Pensions and the Financial Conduct Authority will publish a consultation towards the end of this year on how value for money for members can be better achieved.  Responses to its proposals will be invited.

If you would like to discuss any of the above in more detail or chat through your current pension arrangements or any pensions issues that you may have, please do get in touch with Eve or Claire who would be more than happy to discuss this further with you.