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Q3 2022 outlook for pension scheme trustees and employers

Q3 2022 outlook for pension scheme trustees and employers

14 Jul 2022

What you need to know

  • Q2 2022 was disappointingly quiet in terms of expected developments.
  • Following a consultation in 2021, the Department for Work and Pensions (DWP) was expected to lay regulations to extend the scope of the notifiable events regime from 6 April 2022. However, that date passed with no sign of either the consultation response or final regulations being laid. It’s a similar case for the DWP’s long-awaited consultation on the new defined benefit (DB) scheme funding regulations – this is now expected in the summer.
  • The Pensions Regulator (TPR) is expected to lay its finalised single code of practice before Parliament this summer, and this will require all occupational pension schemes to establish and operate an effective system of governance, including internal controls.
  • Regulations introducing Collective Money Purchase (CMP) schemes will take effect from 1 August 2022. TPR’s related code of practice has also been laid before Parliament, which means it should be in force in time for trustees to apply for authorisation to operate a CMP scheme from 1 August 2022.

Actions you can take

  • Look out for the DWP’s consultation on the DB scheme funding regulations and consider the impact on your scheme.
  • Ensure processes are in place to minimise the risk of non-compliance with the notifiable events regime, and look out for the regulations coming into force.
  • In advance of TPR’s new single code of practice coming into force, consider carrying out a gap analysis to identify what changes to governance policies and processes may be required.
  • If you are considering benefit design, assess whether a CMP scheme might now be an option, or consider reviewing its viability in the future if new types of CMP scheme become available.
  • Trustees of schemes with assets of at least £1bn should already be taking action to comply with the new climate-related governance reporting requirements from 1 October 2022, as well as with the new Paris alignment reporting requirement (which will apply to all in-scope schemes from this date).

Key developments expected in Q3 2022 at a glance

The finer detail: key developments in more detail

Top 3 developments expected in Q4 2022

Simpler annual benefit statements: DC schemes used for auto-enrolment will be required to provide members with simpler, two-page annual statements from 1 October 2022.

Climate change governance and reporting: From 1 October 2022, trustees of in-scope schemes will be required to calculate and disclose a metric showing the extent to which their scheme’s assets align with the Paris Agreement goals. The DWP has published its consultation response, alongside amended statutory guidance.

Facilitating investment in illiquid assets by DC schemes: The DWP has consulted on draft regulations to remove employer-related investment restrictions for large authorised master trusts. It has also proposed new ‘disclose and explain’ requirements for trustees of certain DC and hybrid schemes

For further information, please get in touch with Caroline Ekins, William Fitchew or speak to your usual XPS Pensions contact.