Pensions Law - What’s on the Horizon for 2024? Part 2 - The General Election

In January this year, Martin Jenkins said 2024 would be a busy one for the Pensions industry Pensions Law: What’s on the horizon for 2024? (irwinmitchell.com). Five months on and with the General Election date confirmed for 4 July, Penny Cogher and Harriet Fletcher look at the impact on an already pressured pensions legislative timetable:

Rishi Sunak’s General Election announcement on Wednesday 22 May has left very little time for Parliamentary Business to be completed before Parliament is dissolved next week. Inevitably, many current pensions initiatives will be delayed although we hope that the newly elected government would honour the pensions initiatives that currently enjoy cross-party consensus:

Initiatives with cross party consensus: 

• Reforms to Auto-enrolment: removing the £10,000 earnings trigger and decreasing the minimum age to 18.
• State Pension Triple Lock – but how long might a new government continue with this?
• Pensions Dashboard
• Value for Money initiatives
• PPF as public sector consolidator - 
• Mansion House Reforms – particularly using pension scheme funds as a source of Productive Finance

What’s been delayed / suspended due to the election:

• Delay with expanding the ambit of Auto Enrolment – to remove the £10,000 earnings trigger and lower the minimum qualifying age to 18.
• Secondary legislation to correct malfunctions in the Finance Act 2024 and possibly HMRC updates on this.
• DB Funding Code
  • The Secretary of State has to sign off on this and it has to be laid before Parliament for 6 weeks. There is now no Parliamentary time left to do this.
  • So, the pensions industry will now be in an unsatisfactory position: Schemes with valuation dates of 22 September 2024 onwards will need to take account of a non-existent funding code.
  • Should those schemes follow the Funding Regulations and the draft code that was consulted on in 2022?
  • Will TPR say that trustees have 15 months for the valuation so just wait a while?
• Consolidation of DB schemes – on 11 July 2023 the DWP said primary legislation would be introduced "when parliamentary time allows".
• Mansion House Reforms.
• Legislation to widen the circumstances where extraction of surplus would be permitted.
• Multi -employer Collective Defined Contribution (CDC) schemes.
• Delay on review of freedom and choice and how it works.
• Employer covenant review consultation.
• Universal charging structure proposals – no new developments since 9 November 2021 when the Department for Work and Pensions (DWP) indicated that it would publish a separate consultation response on the universal charging structure proposals.
• Response to the consultation on incorporating social factors into investment decisions – the consultation closed on 1 December 2023.
• Changes to the Pensions Ombudsman's jurisdiction, following the December 2018 consultation, including widening the Ombudsman's jurisdiction to permit employers using group personal pension (GPP) arrangements to make a complaint of maladministration or refer a dispute of law to the Ombudsman.
• Changes to the restrictions on what is guidance compared to what is advice.

Unresolved questions:

• How long will a new Government maintain its pre-election commitment to the Triple Lock?
• Will the timetable for State Pension Age (SPA) increases change? 
  • Currently, SPA will increase from age 66 to 67 by 2028, and to 68 by 2046.
  • Plans to accelerate the increase in SPA to 68 by 2037-39 were postponed last year, when the DWP said a further review would be carried out within two years of the next Parliament.
• Lifetime Allowance (LTA)
  • Would a new Government reverse the abolition of the LTA?
  • We know that is how the Labour Party responded to Jeremy Hunt’s 2023 Budget speech.

Conclusion:

DWP research published last year showed over 12.5 million individuals of working age are not saving enough for retirement. We think the Association of Consulting Actuaries Pensions and Savings’ Manifesto published on 10 May has got the balance about right when it calls for the main political parties to focus on a narrow, achievable, and deliverable list of priorities to ensure today’s working generations build adequate levels of pension saving.