Legal News

Data from the Thinking Ahead Institute (a research network founded by WTW) shows an uplift on the US$50.1trn held by retirement funds in 2022. WTW said on 26 February 2024 that stronger capital markets were the main driver of 2023’s growth over the year. Jessica Gao, director at the Thinking Ahead Institute, noted that pension assets are rising again, as the pensions industry’s importance expands in a world confronting new challenges and avenues for future prosperity. She remarked that growth has returned to the agenda. Gao said that, while growth was not rapid, it was better than 2022......

The Society of Pension Professionals ( SPP) The Society of Pension Professionals ( SPP) stated on 26 February 2024 that the so‑called advice guidance boundary review, initiated by the Financial Conduct Authority ( FCA), represents a move in the right direction. The financial watchdog and the government say an advice gap bars people with smaller pots from seeking cost‑effective help. In an August 2023 consultation, the FCA flagged worries that too few adults obtain financial advice and that pension providers shy away from offering any sort of guidance to members. It has proposed three possible remedies which, it says, could enable a larger share of savers to gain from broader, more general guidance across the pensions landscape today......

NBC ( Administration Services) Ltd v Revenue and Customs Commissioners [2024] UKFTT 120 ( TC) What are the practical implications of this case? Grasping this judgment will aid practitioners representing clients who wish to challenge a deregistration decision or an information notice issued under FA 2008, Sch 36 Pt 1. The FTT has offered useful guidance on the reach of its own discretion, and that of HMRC, when considering deregistration. It confirmed that, following Caerdav Ltd v HMRC [2023] UKUT 00179 ( TCC) (unreported by Lexis Nexis®UK), the FTT does have jurisdiction to entertain appeal grounds advancing public law arguments where the statutory scheme permits. Under FA 2004, s 159(6), Parliament expressly requires the FTT to determine ‘whether the registration of the pension scheme ought to have been withdrawn’, rather than, as the FTT noted, asking what decision it would make if...

On 23 February 2024, the DWP said it was inviting broad industry views on what it calls surplus extraction. This permits workplace pension schemes to deploy assets exceeding those needed to cover liabilities to enhance member benefits or strengthen the sponsoring employer. The consultation, part of the government’s wider productive finance agenda, is aimed at unlocking the retirement market—often described as a sleeping giant—to channel more capital into the domestic economy. Official data released on 15 February 2024, firmly confirmed that the UK had slipped into a technical recession, with gross domestic product declining for a second successive quarter overall......

On 22 February 2024, TPR confirmed that a suite of new functions, due to go live in April 2024, has been shaped for a shifting landscape that brings fresh risks and openings for savers. Among these is a regulatory compliance function, which TPR said will safeguard savers’ interests through the ‘effective and efficient’ delivery of compliance services aimed at schemes and employers. TPR added it will seek to lift market standards via targeted engagement with schemes under a new market oversight function, concentrating on delivering value for money and strong trusteeship. It also plans to introduce a strategy, policy and analysis function, through which TPR will draw on insights from its activities to refine the regulatory framework and back so-called market innovation......

In November 2023, a poll of 200 financial advisers who took part in the study by research consultancy Next Wealth with Aegon UK reported 71% said clients feared exhausting their pension pot, making it the foremost worry for people seeking professional advice on saving for retirement. Additionally, 64% cited inflation and the cost of living crisis as pressing issues of concern, and 49% noted clients were anxious about long-term care expenses. It is unsurprising indeed that fears about long-term care costs appear among the top three concerns for retirement clients, said Steven Cameron, pensions director at Aegon UK......

What is the background to the FMLC's paper? In recent years, climate change and wider sustainability have moved to the forefront of the pensions sector, with a growing body of statutory guidance and regulation—especially for master trusts and large schemes—directed at this area. Notably, the relatively new Task Force on Climate- Related Financial Disclosures regime for pension schemes requires processes to ensure trustees factor in the risks and opportunities arising from climate change. More broadly, there has been a gradual but persistent shift towards fuller trustee reporting on how sustainability considerations are embedded within their investment approach. However, concerns have been raised that fiduciary duties may have limited trustees’ ability to incorporate climate and sustainability factors into investment decision-making, leading to inaction. This has prompted questions about the extent to which trustees can take steps to tackle climate change and...

In this issue: The Pensions Regulator Personal pensions Central government pensions Disputes and litigation Daily and weekly news alerts Dates for your diary Trackers The Pensions Regulator TPR publishes blog post on developing wider ESG approach to investments The Pensions Regulator ( TPR) has released a blog urging pension scheme trustees to embed broader environmental, social and governance ( ESG) factors in response to expanding climate reporting obligations. Drawing on climate disclosures that show rising awareness of climate-related risks and opportunities, and a move towards more sustainable investments, TPR asks trustees to strengthen their grasp of wider ESG and its links to climate, and to update scheme policies where needed. Trustees are encouraged to review recommendations from the UK Transition Plan Taskforce, the Taskforce for Nature-related Financial Disclosures ( TNFD), and the Taskforce on Social Factors. The blog also...

On 21 February 2024, advocates for sustainable finance told the parliamentary Work and Pensions Committee that the Pensions Regulator should issue additional guidance to spur climate-positive investment. The Committee is examining whether trustees’ fiduciary duties around pension investment choices ought to be updated, as the UK pursues broader plans to cut carbon emissions to net zero by 2050. In 2021, the government brought in rules for UK pension schemes, obliging them to produce disclosures on the financial risks posed by climate change. The initial wave of reports appeared in July 2022. Yet industry specialists argued that the framework has scarcely prompted a material shift in investment behaviour to date, according to sector voices......

People’s Partnership On 19 February 2024, People’s Partnership—one of the UK’s largest workplace pension providers—stated that a 30-year-old earning £30,000 could end up with an almost £33,000 shortfall in their retirement funds by the age of 67 if they transferred a £10,000 pension pot from a scheme charging 0.4% to one levying 0.75%. For anyone moving a £50,000 pot, the potential hit to retirement savings could total as much as £59,523, the profit-for-people body noted. If the same individual’s pay rose to £45,000 and they chose to transfer a £50,000 pension, the predicted gap at retirement could rise to £72,689. People’s Partnership surveyed 1,000 people between November and December 2023 who had brought together their workplace pensions within the past two years without the help of a financial adviser. It said these estimates were based on a hypothetical case of a...

Annual pension landscape report TPR’s latest annual pension landscape report records a decline in the tally of DB pension schemes in Britain, slipping from 5,378 to 5,297 since 2022. Over the same timeframe, the count with full or stronger funding rose from 2,565 to 3,620, according to the publication. Lou Davey, interim director of regulatory policy, analysis and advice at TPR, said that while year-on-year changes in scheme status have been modest, the overall pattern is of a market that continues to contract. Funding positions have been bolstered during the past year by higher yields on UK government bonds, commonly referred to as gilts......

The Association of British Insurers noted that annuity purchases rose by 46% compared with the 2022 amount of £3.36bn, reaching the strongest sales level in a decade. Annuity contracts, which provide a guaranteed retirement income, become more appealing as interest rates move higher, with rising rates boosting attractiveness of these deals......

Liquidators for Trafalgar Multi- Asset Trading Co Ltd, in an amended claim lodged on 7 February 2024, report they have recovered £1.9m of nearly £6m sought from D& A Nominees Ltd, which served as director to the purported sham investment entity Momentum Property Partners. According to the liquidators, the £1.9m was obtained in September 2023 via connected, confidential proceedings, the liquidators said. Their case against D& A revolves around assertions that D& A failed to identify Momentum’s issuance of £6m in loan notes to Trafalgar, and then did not return Trafalgar’s funds after they were paid into a Momentum bank account controlled by fraudster James Hadley, as set out in amended claim......

In this issue: Pensions taxation Funding Scheme governance Daily and weekly news alerts Dates for your diary Trackers Pensions taxation HMRC publishes second lifetime allowance guidance newsletter HMRC has released its Lifetime allowance guidance newsletter for February 2024 which, amongst other points, offers further clarity on pension commencement excess lump sums ( PCELS), reporting obligations, and transitional tax‑free amount certificates. In Pension Schemes Newsletter 155 ( January 2024), HMRC had previously raised concerns about the operation of PCELS. It has now responded to several of these, confirming that the ‘permitted maximum’ for PCELS will be removed from legislation. As a result, a lump sum will no longer be checked against a member’s remaining lump sum and death benefit allowance to decide whether it can be paid as a PCELS. HMRC also makes clear that to be eligible for a PCELS a...

BVCA Despite being Europe’s largest and worth £2.5trn, the UK pensions market trails other nations, according to industry body the BVCA. The association said its panel’s purpose is to help UK savers make more from their investments. It intends to lift performance by removing the obstacles that stop pension schemes backing fast‑growing businesses. It will review international examples to inform its approach. The group will also examine how to channel additional capital into those companies. “ We will carefully assess how pension funds in other countries have managed to invest successfully in UK funds,” said Kerry Baldwin, managing partner at IQ Capital Partners LLP and chairing the panel. Baldwin added that the panel will “get to the root of the technical and structural barriers that restrain investment by UK pension funds”......

Labour’s long‑trailed blueprint for financial services, released earlier this month, set out pension proposals that lean heavily on the incumbent Conservative government’s so‑called productive finance programme, with its emphasis on boosting growth. The publication eased concerns that a fresh administration might raid pension savings to plug yawning budget shortfalls. Yet sector watchers are not braced for upheaval; instead, they are scrutinising nuanced shifts in Labour’s wording for signs of future movement. They want to gauge the likely direction of travel over time. One focus is how Labour interprets the term 'productive investment' across its policy notes. David Brooks, head of policy at pensions consultancy Broadstone, notes that Labour appears intent on further steering capital into long‑term illiquid assets associated with productive finance, adding that continuity in pensions policy, even with a possible change of government, will reassure the industry and is...

According to the PPF, the combined surplus across the nation's 5,050 defined benefit ( DB) pension schemes stood at £425.4bn at end- January 2024, a modest dip from £428.2bn recorded at end- December 2023, signalling a small month-on-month decline. A surplus in a pension scheme means its assets exceed its liabilities. These plans hold substantial allocations to government bonds, commonly called gilts. Over the past year, rising gilt yields have supported scheme funding levels across the sector in recent months. ' The slight movements in the overall surplus and......

Mark Kubulus and Clare Rose informed the High Court that Energy, Safety and Risk Consultants ( UK) Ltd breached their contracts by failing to provide them with an early full pension and a lump sum after their roles were removed in 2015 by the company, per a 22 January 2024 claim publicly disclosed on 9 February 2024. They argued that their benefits under 1980s employment contracts with the UK's state-owned electricity supplier persisted through a succession of employment transfers. Those rights included an early pension and lump sum if their employer made them redundant once over 50, the claim document states. Accordingly, Kubulus and Rose have brought formal legal proceedings against their former employer seeking £293,000 and £152,000, respectively, before interest......

Just Group plc’s research shows that 38% had not reviewed their forecast, even though, in total, 1.2 million UK households nationwide depend on the state pension as their main source of income in retirement. Among people who left work earlier than planned, this climbed to 46%. The survey questioned more than 1,000 over-55s who were currently retired or semi-retired. Roughly 17% reported their actual state pension was at least £250 a year lower than expected, while 9% found it was at least £250 higher per annum than anticipated. Stephen Lowe, group communications director at Just Group, called the state pension the cornerstone of retirement income for millions of retired households indeed and said it’s easy to understand why many quite reasonably might assume they’ll......

What was the background to the DWP’s consultation and what was proposed? The PSA 2021 placed a duty on trustees of defined benefit ( DB) schemes to set out a long-term approach for delivering benefits under the scheme — a funding and investment strategy — and to produce a written statement explaining that approach. The central concept behind the new funding rules is that, by the point a scheme attains ‘significant maturity’, it should exhibit ‘low dependency’ on the employer. Low dependency indicates the scheme holds sufficient assets to cover accrued benefits and, in reasonably foreseeable scenarios, is not expected to require further employer contributions. To deliver this, trustees must decide on a strategy that ensures, by and after the ‘relevant date’: scheme assets are invested in line with a low dependency investment allocation the scheme is fully funded on a low...