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Spring Budget, Finance (No.2) Act 2023 and Finance Bill 2024
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April 6, 2024
April 6, 2025
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The Finance (No.2) Act received Royal Assent on July 11, 2023.
Changes include removal of the LTA charge, increase of the annual allowance from £40,000 to £60,000 and increase in the MPAA to £10,000 from April 2023. The LTA has been abolished completely from April 2024 under the Finance Act 2024, which received Royal Assent on February 22, 2024. Two new tax-free cash allowances introduced.
Amendments are necessary to correct anomalies in the legislation. The consultation period on the changes concluded on August 14, 2024.
New top-up payments to those entitled to pensions tax relief on net pay basis, with employment income under personal allowance level. For contributions made in tax year 2024/25 with first top-ups made by HMRC from April 6, 2025.
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| Regulator’s new General Code of Practice comes into force, including a requirement for an annual “own risk assessment”. |
Came into force March 28, 2024.
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Check scheme and employer are compliant with the Code’s requirements.
Consider planning first “own risk assessment”, if relevant.
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Requirement to measure and report on how scheme investments align with Paris agreement.
Climate change risk governance and disclosure requirements extended to further schemes.
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October 1, 2022
From October 1, 2022, for second wave of schemes (assets of £1bn and above).
Requirements may be extended to smaller schemes (assets under £1bn) from late 2024 or early 2025 – TBC. |
Discuss the requirements with managers.
Second wave schemes to finalise and follow project plan for implementing governance structures and reporting.
Smaller schemes to consider whether to comply on a voluntary basis.
See Regulator’s blog April 2023 and review of scheme climate change governance reports.
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| DC scheme governance |
From October 1, 2023
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Consultation on draft regulations for new Value for Money framework.
Inclusion of detail of illiquid investment policies in default SIPs and disclosure of asset allocation in Chair’s Statement.
Draft regulations expected extending CDC to multi-employer schemes Autumn 2023.
The anticipated Pension Scheme Bill 2024 is expected to include provisions for a new value for money framework. Additional changes include consolidation of small DC pots and new requirements relating to decumulation options for members.
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| Notifiable events: changes to current regime |
Awaited. Originally expected October 2022.
Consultation on detailed regulations closed on October 27, 2021. Final regulations still awaited (originally expected to come into force from April 6, 2022). Significant uncertainty remains about the progress of changes to the regime.
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Update or implement a notifiable events protocol for employers and trustee to minimise risk of breaches.
Train key people on the new requirements.
Review trustee confidentiality agreements.
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Legislative framework for superfunds
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2024
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The Government sees superfunds as a route to greater investment in UK illiquid assets. The Chancellor set out plans for introducing a “permanent superfund regulatory regime” in his Mansion House speech on July 10, 2023, “as soon as Parliamentary time allows”. Look out for draft regulations and a consultation in due course.
Clara Pensions passed the Pensions Regulator’s assessment for DB consolidators in November 2021 and its first transaction (Sears) took place on November 28, 2023.
Regulator updated online interim superfunds guidance August 2023.
The DWP says it will establish a DB consolidator by 2026. Consultation on features for a possible scheme closed on April 19, 2024.
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| Relaxation on DB surplus refunds |
April 6, 2024 |
The Autumn Statement included an announcement that the tax charge on repaying DB scheme surplus to employers will be reduced from 35 per cent to 25 per cent.
Consultation on Options for DB schemes closed on April 19, 2024. No reference to legislation being included in forthcoming Pension Schemes Bill.
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Pension Protection Fund (PPF) levy rules for 2025
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New levy determination and rules published December 14 2023.
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Owing to the PPF’s “very strong financial position”, it has been confirmed that a levy reduction of around 50 per cent from the 2023/24 year to £100m will apply for 2024/25.
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Pensions Dashboards
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From April 2025 to October 2026.
Compulsory staged on-boarding of schemes, starting with the largest schemes.
The staging dates are now deferred and a DWP announcement should be made before the summer recess confirming the new deadlines.
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Staging deadlines have now been set out in guidance rather than regulations. All schemes with 100 or more relevant members at the scheme year end between April 1, 2023, and March 31, 2024, must be connected by October 31, 2026.
Applications for deferral (in limited circumstances applying on August 9, 2023) must have been made by August 8, 2024.
Review TPR guidance, identify staging date and develop action plan for getting data ready for dashboard. Discuss with administrators and service providers.
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DB scheme funding: changes to requirements
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Final version of Investment and Funding Strategy Regulations 2024 came into force April 6, 2024, with application to schemes with valuations on and from September 22, 2024. Regulator’s revised DB funding code due to come into force October 2024.
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Consider scheme’s long-term objective and journey plan and discuss with employers.
Consultation on draft funding and investment regulations now closed. Draft funding code for consultation published December 16, 2022, closed March 24, 2023, along with a separate consultation on Fast Track/bespoke regime. Consider potential implications with advisers.
Further covenant guidance is now expected in 2024.
TPR has consulted on the form of the statement of strategy. Response awaited.
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Additional information required to be provided in annual DB scheme return on tier-based section 179 liabilities:
Tier 1 up to £30m
Tier 2 £30m - £1.5bn
Tier 3 over £1.5bn
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March 31, 2023
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Further detail published by the Regulator in December 2022. Trustees should discuss new requirements with asset managers and advisers.
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Taskforce on Nature-related Financial Disclosures (TNFD) framework expected to be available for adoption
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2023
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The TNFD aims to create a disclosures framework for nature similar to that developed by the TCFD for climate change.
An initial version of the TNFD framework was published on March 15, 2022. Monitor developments.
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Pension Schemes (Conversion of GMPs) Act 2022 – Private Members’ Bill introduced in 2021
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Received Royal Assent April 28, 2022. Not yet in force.
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For noting by formerly contracted-out schemes.
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DWP due to review regime for deferred debt arrangements applying to employers withdrawing from multi-employer schemes.
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For noting.
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Financial Reporting Council changes to calculation of statutory money purchase illustrations (SMPIs).
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October 1, 2023
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New approach to apply SMPIs on pensions dashboards apply from October 1, 2023. However, issues raised during consultation yet to be addressed.
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| Corporate transparency |
March 4, 2024 |
The Economic Crime and Corporate Transparency Act 2023 introduces requirements on identity verification, corporate directors and limited partnerships. It will be relevant for all schemes with corporate trustees.
The requirement to have a registered email address came into force on March 4, 2024. Other provisions are due to come into force in 2024.
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Second review of State Pension Age (SPA) to be carried out in first two years of next parliament.
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2024/5?
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SPA is currently 66, with two further increases set out in legislation: a gradual rise to 67 for those born on or after April 1960 and a gradual rise to 68 between 2044 and 2046 for those born after April 1977.
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| Private Members’ Bill, the State Pensions Age (Compensation) Bill introduced to Parliament. |
Second reading due May 17, 2024 |
Compensation of up to £10,000 per person proposed for women born between April 6, 1950 and April 5, 1960 who were affected by the increase in SPA. For noting. |
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VAT treatment of fund management services
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2023
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Written statement from HMT published December 14, 2023 on joint consultation from HMT and HMRC on proposals to codify VAT exemption for SIFs under UK VAT law. The proposed codification of SIFs will not proceed, and the current rules will be retained. Fund management services can be VAT exempt either by statutory exemption or because they are regarded as SIFs.
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State pension top-ups
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April 5, 2025
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Further extension to deadline to April 5, 2025, for individuals to complete their post-April 2006 NIC record.
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Reforms to auto-enrolment – lower minimum age to 18 and remove lower earnings limit.
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The Pensions (Extension of Automatic Enrolment) (No.2) Act 2023 received Royal Assent on September 18, 2023. The relevant provisions are not yet in force.
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HM Treasury to conduct review to consider a long-term approach ahead of new June 2025 exemption date for schemes using derivative OTC contracts under EMIR.
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Before June 18, 2025
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HMT issued a call for evidence on the exemption for pension funds from the UK EMIR clearing obligations. Call for evidence closed January 5, 2024.
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First Government top-up amounts to be paid to low earners in schemes using net pay arrangements
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Based on contributions made in tax year 2024/25, but top-ups to be paid 2026/27.
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Draft legislation included in Finance Bill 2023.
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Rise in normal minimum pension age from 55 to 57
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April 6, 2028
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Legislation (Finance Act 2022) in force from February 24, 2022.
Take advice on which members benefit from the new protected pension age (of 55).
Formulate member communications strategy.
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RPI reform and switch to CPIH
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2030
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The judicial review of this decision has now been dismissed so Trustees should take advice on implications for DB schemes and consider what preparatory steps may be required. No appeal has been sought, so the judgment is final.
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