- DWP consults on pensions dashboard regulations
- Pensions minister puts the dampers on auto-enrolment extension any time soon
- Pensions Regulator publishes latest DC trust statistics
- Pensions Ombudsman sets up Dishonesty Unit
- Nest passes muster
- Substantial increase in the PPF levy ceiling
DWP consults on pensions dashboard regulations
The long-awaited consultation by the DWP on regulations relating to pensions dashboards was launched on 31 January 2022 in the form of a 137-page consultation document and 28-pages of ‘indicative’ draft regulations.
The regulations, amongst other things, lay down what occupational pension schemes must do to connect with and supply information to the dashboard and by when they must do these things. There is much more to come, making 2022 a year of pensions dashboard action for nearly all mainstream UK pension schemes.
For further details of this important development see our News Alert.
Comment
These are ambitious proposals from the Government and mark an important stage in the dashboard journey. Whilst the dashboard may not be switched on to receive ‘find requests’ from the public until at least 2024, schemes do now need to start to take action so they can connect with this electronic interface and interact efficiently with it by the staging date set out for them in these regulations.
Pensions minister puts the dampers on auto-enrolment extension any time soon
A Westminster Hall debate on auto-enrolment held on 26 January 2021 was an opportunity for the pensions minister, Guy Opperman MP, to indicate the extent to which he supported his backbench colleague’s Private Member’s Bill that seemingly would deliver the next step in the pensions auto-enrolment journey that has been agreed by the Government in the 2017 auto-enrolment review. But it seems that the Pensions (Extension of Automatic Enrolment) Bill (see Pensions Bulletin 2022/01) has come too soon for the Government to support it and that instead we will possibly have something looking remarkably similar introduced in either the third or fourth session of this Parliament and heralded by the relevant Queen’s Speech – ie either this year, but more likely next year (if at all in this Parliament). Such a Bill may include other pensions matters, but Mr Opperman was not giving any clues as to what these could be.
Comment
A clear disappointment for those in work but currently outside the auto-enrolment net due to their youth or earnings (or both). Whilst Richard Holden MP’s Bill may have been too soon, the fact that Guy Opperman was not able to set out a clear timetable in response suggests that it is one thing for the Government to accept the 2017 review (which it did), but another to implement it.
Pensions Regulator publishes latest DC trust statistics
The Pensions Regulator has published its latest landscape report on the DC occupational pension scheme market, showing the number, membership and assets of schemes in this market, using schemes on its register as at 31 December 2021.
Amongst the statistics highlighted by the Regulator are the following:
- The market has further consolidated over the last year with the number of non-micro DC schemes (ie with 12 or more members) falling by 12% from 1,560 to 1,370 – this continues a trend that has been observed since 2012
- There are now 36 authorised master trusts with 20.7 million DC memberships and over £78.8bn in assets (compared with 38, 18.8 million and £52.7bn this time last year)
- Asset values of DC schemes (excluding micro and hybrid schemes) are £113.5bn – up £26bn from last year
- The average assets per membership at retirement was £5,100 – a 3% fall since last year
Introducing the report, the Regulator says that these statistics point to further consolidation taking place in the DC trust market which it expects to continue as small schemes are now required to demonstrate that they provide value for members (and where they don’t, to wind up or take immediate action to make improvements). The report also shows, once more, the strong growth in assets under management as memberships continue to build.
Comment
The consolidation trend over recent years continues to some degree, with stability in number of schemes only being reached once scheme membership reaches the 5,000 mark. What is unknown at this stage is how much further this process has to run and what influence the various governance measures being imposed by the DWP and the Regulator will have, but it does seem likely that consolidation at the smaller end of the market will continue for a good few years yet.
Pensions Ombudsman sets up Dishonesty Unit
In a welcome development the Pensions Ombudsman has established a dedicated Pensions Dishonesty Unit to investigate allegations of serious breaches of trust, misappropriation of pension funds and dishonest or fraudulent behaviour by pension fund trustees.
This initiative follows a number of recent high value Ombudsman Determinations where wrongdoers have been held personally liable for millions of pounds. The Ombudsman hopes that piloting this dedicated unit will enable quicker redress and recovery of funds directly from the guilty parties.
Comment
We wish the Ombudsman well with this. Even if fraudsters and thieves end up successfully prosecuted it is daunting for victimised members to go about obtaining redress. Having the Ombudsman batting for them could make a real difference.
Nest passes muster
The DWP has published a very positive report on the role of the National Employment Savings Trust (Nest) in relation to its impact on both the market it serves and the wider workplace pensions market.
The report, requested by the pensions minister on Nest’s 10th anniversary, looks at Nest from when it opened for business in 2011 up to the present day. It concludes that Nest has successfully achieved the objectives set for it at outset and delivers value for money for its members.
Some recommendations are made on how it could improve further, including using its scale to drive down its investment costs and making changes to its rules to address the small pots issue on which Nest is particularly exposed given the low-income market it targets due to its public service obligation. As for the fear that Nest might crowd out other market participants, the report says that Nest is recognised as largely complementing the market through targeting groups at risk of being poorly served, but work should be done to evidence this clearly going forward.
Comment
There are no surprises in this report which must come as welcome news to Nest. It has had an extraordinary journey taking on millions of members, hundreds of thousands of employers, collecting and investing for them very modest sums per head. Without Nest, the auto-enrolment policy would likely have failed.
Substantial increase in the PPF levy ceiling
The overall pension protection levy “ceiling” for 2022/23 will be £1,178,605,581 – as set out in the Pension Protection Fund and Occupational Pension Schemes (Levy Ceiling) Order 2022 (SI 2022/88) made by the DWP on 28 January 2022.
This is a 7.2% increase on the 2021/22 ceiling due to there being a substantial growth in average weekly earnings in the year to July 2021. The actual maximum levy the PPF can take in 2022/23 is further constrained by other rules and is substantially less than the £1.2 billion permitted by this particular Order. The PPF is intending to raise £390m in 2022/23 (see Pensions Bulletin 2021/53).
Usually, at this time of year, the new level of the compensation cap is set, but with the Court of Appeal finding that this cap is discriminatory on grounds of age, it has been disapplied for the purpose of calculating PPF compensation. So, this year’s Order does not also set the new level of the cap.
Comment
This ceiling, intended as a safeguard for DB schemes worried that the levy could spin out of control, has not had any meaning for many years, but each year it is recalculated as the law requires this to be done.
