Pensions

Contact: Rachael Healey

Pensions

Pensions Ombudsman publishes corporate plan 2024/25

The Pensions Ombudsman (TPO) has recently released its Corporate Plan for 2024/25 which sets out key priorities aimed at addressing the increasing demand for its services and the challenges that come with it.

TPO is experiencing a notable rise in demand, and the complexity of cases is on the rise as well (with 6,923 new complaints in 2023/24 and a forecast of 8,917 for 2024/25). With additional funding from the Department for Work and Pensions (DWP) and some internal efficiencies, the pressure is still mounting, leading to longer waiting times and a backlog of cases that TPO is eager to address.

Key priorities for 2024/25 as set out in the report include:

making process changes to reduce waiting times
reducing the number of older, complex cases from its historical caseload
improving signposting and pre-application journey, offering more self-service information to ensure the right complaints reach TPO
securing long-term funding of the Pensions Dishonesty Unit
expanding TPO’s specialist knowledge in pensions
reviewing the current systems to ensure TPO clearly understand what's needed to deliver further efficiencies and meet the expected increase in demand.

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TPR’s annual review of occupational defined benefit scheme funding

The Pensions Regulator (TPR) has released its annual report on occupational defined benefit (DB) and hybrid pension scheme funding in the UK. The analysis, based on tranche 17 schemes with valuation dates from September 2021 to September 2022, shows significant improvements in funding levels and shorter recovery plan durations. Key findings include: 47% of schemes reported a surplus, up from 32% in tranche 14; the average asset-to-technical provisions ratio was 97%; and the average recovery plan length for schemes in deficit decreased to 4.7 years from 6.2 years in tranche 14. The report, produced in accordance with official statistics standards, demonstrates a positive trend in DB scheme funding across different scheme sizes.

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Pensions

TPR issues compliance and enforcement policy for pensions dashboard

On 5 September 2024, the Pensions Regulator (TPR) introduced its compliance and enforcement policy for pensions dashboards, emphasising the obligations for all relevant schemes to connect by 31 October 2026. The Department for Work and Pensions has set a phased timetable, with the first connection date on 30 April 2025. "Connect by" dates depend on pension scheme size and type and the number of members as at year end 2023/2024.

TPR's policy highlights the importance of immediate action from trustees and scheme managers to ensure compliance. Key requirements include preparing for connection, improving data quality and maintaining comprehensive audit trails. TPR plans to engage with schemes this autumn to evaluate their readiness and data management processes.

For any DC or DB trust-based schemes operated by an employer they need to pay regard to the obligations imposed by the pension dashboard and ensure they meet connection deadlines.

RPC's blog on this can be read here

DB funding code takes effect

TPR has confirmed that trustees of defined benefit (DB) schemes whose actuarial valuations dates fall after 22 September 2024 should now refer to the new DB funding code (which is due to come into force in late November 2024). The Regulations require trustees to:

determine a funding and investment strategy, setting out how they intend for the scheme to provide benefits over the long term
record the funding and investment strategy in a statement of strategy.

Trustees are required to submit their statement of strategy "as soon as reasonably practicable" after preparing their funding and investment strategy. TPR is due to launch a digital platform to accompany the new code in spring 2025 and has confirmed that it "will not regard trustees or scheme managers as being in breach of the regulations if a delay in the launch of its digital system next year results in there being a gap between preparation of the funding and investment strategy and submission of the statement of strategy". Despite this, TPR has warned trustees against delaying valuations simply because they must wait to submit them on the new platform. It is thought that the changes to the funding code are likely to increase deficits in the short-term.

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Pensions

TPR cracking down on schemes failing to deliver value

The Pension Regulator's (TPR's) latest Compliance and Enforcement Bulletin reveals that Defined Contribution (DC) schemes have been fined £33,750 in total following the introduction of TPR's detailed value for members (dVFM) assessments last year.

These assessments require trustees to assess whether they deliver value to members. Between January and June 2024, TPR used its powers 10 times in relation to dVFM assessments, issuing seven penalties totalling £19,250 and three improvement notices. The dVFM assessments are also leading some schemes to wind up. Around 17% of the schemes TPR engaged with concluded their schemes did not offer good value and opted to wind up.

TPR's Bulletin also reveals the regulator fined two pension schemes for failures relating to annual climate change reports. TPR confirms it is increasing its focus on investment governance and that firms should be prepared to be challenged on their climate reporting disclosures.

TPR also continued to use its automatic enrolment powers with an increase in Compliance Notices, Unpaid Contribution Notices and Fixed Penalty notices, when compared with the previous period.

The above shows trustees of DC schemes are under increased pressure to ensure schemes are delivering value for money alongside other compliance measures.

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