‘Pension schemes face uncertainty as new rules delayed by election’ – David Fairs

The surprise timing of the General Election will impact TPR’s new funding code according to a new blog from LCP’s David Fairs who was also former head of policy at TPR.

The Regulations bringing the new regime into force on the 22nd September have already been laid.  TPR’s plan was to lay the new Code during June in order to give the necessary 40 days for the Code to come into effect for the September implementation date.  But even if TPR could lay the Code before the end of the week, there will not be enough time for the Code to be effective for the September date. This means that schemes with valuation dates shortly after 22nd September will to have to comply with new Regulations without having the benefit of the guidance from the Code on how TPR expects schemes to interpret them.

If the next Government wants to pursue a different approach, there could be a significant delay before the new Code is laid.  In those circumstances, the Trustees might have to rely on the draft Code that was consulted on at the end of 2022, also taking account of changes from the draft to final Regulations.

Fairs also believes that an early review of pensions taxation could be on the agenda for a new government that has tight finances to navigate.  He believes this is something that could be an early priority in the new Government’s term of office.

However, there are also areas of pensions policy where there is cross party support. This includes the development of multi-employer CDC and at- retirement CDC plans as well as Pension dashboards, value for money requirements, and implementation of the 2017 Automatic Enrolment reforms are also likely to be adopted by a new Government. 

Using pension assets to help boost the UK economy in some form is likely to persist whoever forms the next Government.  And that also means that the building blocks to facilitate investment in productive finance will also be on the next Government’s agenda.

Fairs believes that there is likely to be a focus on consolidation, the adaptation of the Pension Protection Fund to establish a public sector consolidator and a full authorisation regime for superfunds. He believes there may also potentially be the facilitation of the extraction of surplus in order to incentivise pension schemes and their sponsors to think of wider investment strategies.      

David Fairs commented: “Pensions policy has been a fascinating and busy area in recent times and it looks like it will continue to be a fascinating for the foreseeable future. The timing of the election took us by surprise and while it’s clear that there will be some changes coming down the track and uncertainty around the funding code, there will also be a lot of continuity around some of the big themes.”

You can read David’s blog here.