Pensions: DC Trustee agenda update - October 2024

FCA consults on new VFM framework

The Financial Conduct Authority (FCA) is consulting on a value for money (VFM) framework for savers in DC default arrangements (read more).

The government intends to legislate to apply equivalent measures to trust-based schemes in due course, and TPR encourages trustees to engage with this consultation (read more).

The proposed framework has four key aspects – measurement of investment performance, costs and service quality against specified metrics; assessment of performance against other arrangements on a consistent and objective basis; disclosure of assessment outcomes; and action to improve schemes that do not provide VFM.

ACTION: Review the proposals and consider responding to the consultation.

Pensions dashboards update NEW!

The Pensions Regulator has published its pensions dashboards compliance and enforcement policy and has again urged trustees to be prepared in good time to comply with their dashboards duties. TPR plans to take a pragmatic approach to enforcement save in cases of wilful or reckless non-compliance, and will focus on the quality of scheme data, robust internal scheme governance, and connection compliance.

The policy includes illustrative scenarios of how TPR might deal with breach situations (read more).

ACTION: Review the policy and check that steps are in place to maintain an audit trail of your preparations for dashboards compliance.   

TPR review of trustee ESG compliance

TPR has published a market oversight report setting out findings from its review of how pension scheme trustees are complying with their ESG duties, based on a review of statements of investment principles (SIPs) and implementation statements (read more).

Overall, TPR would like to see more than minimum compliance in respect of the contents of these documents – for example, greater evidence of trustee oversight where the management of financially material risks, engagement and voting have been delegated to an investment manager; more scheme-specific detail on voting activity; and trustees going beyond climate change reporting to include other material ESG considerations, such as nature loss and social factors.

ACTION: Read the report and consider whether TPR’s recommendations could be implemented in your SIP or implementation statement. 

Changes to Ombudsman processes

The Pensions Ombudsman (TPO) has announced that it will no longer be possible for complainants to use its Early Resolution Service as an alternative to their scheme’s internal dispute resolution procedure. It has published an updated factsheet reflecting this change and setting out wording that can be used to signpost members to its services (read more).

ACTION: Check that TPO contact details are up to date in standard communications and make any relevant changes to wording about the early resolution service. 

Watch this space

• Further technical changes to the rules replacing the Lifetime Allowance are expected, with retrospective HMRC has published numerous FAQs explaining details of the new rules (read more).
• The forthcoming Pension Schemes Bill (read more) is due to cover measures including the automatic consolidation of deferred DC small pots and the introduction of a standardised VFM test for DC schemes. It will also introduce duties for trustees to offer decumulation options to members and will remove the need to apply to the County Court to enforce the recovery of an overpayment following a TPO decision.
• The government has also launched a multi-phase pensions review, which will look over the next few months at actions to support greater productive investment and better retirement outcomes, including identifying any further actions to drive investment that could be included in the Pension Schemes Bill. A later phase will consider the wider pensions landscape, including pension adequacy (read more).

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