Issues affecting all schemes
Finance Act 2022
The Finance Act 2022 has received Royal Assent. Its pension-related provisions include:
- An increase in normal minimum pension age (NMPA) to 57 with
effect from 6 April 2028. It also introduces an associated
protected pension age regime under which members of registered
pension schemes who meet certain criteria can retain a protected
pension age of less than 57. For more information on the increase
in NMPA, please see our legal update.
- An extension in certain circumstances to the reporting and payment deadlines for member requests to use the "scheme pays" mechanism. The changes are designed to enable members whose pension input amount for a previous tax year is retrospectively amended to use the "scheme pays" facility to pay any resulting annual allowance charge that is over £2,000. The extension came into force on 6 April 2022, but has retrospective effect to 6 April 2016.
Action
Trustees and administrators should consider how the increase to NMPA will affect their members and what member communications may be required. They should also ensure that their administration processes are updated to reflect the new reporting and payment deadlines for "scheme pays".
Annual allowance – provision of information
Regulations came into force on 6 April 2022 that impose new requirements on the provision of information in relation to the annual allowance. In particular:
- Employers will be required to update information provided in
the previous six tax years to schemes for the purposes of
calculating a member's pension input amount (PIA) where they
subsequently discover that the information provided was
insufficient to enable the scheme to correctly calculate the
PIA.
- Where a member's PIA in any of the previous six tax years has changed as a result of either the provision of additional information by the employer or a change in the scheme rules, and the member has exceeded the annual allowance for that tax year (whether under the original or updated calculation of the PIA), schemes must send the member a new or updated (as applicable) pension savings statement.
Action
Employers, trustees and administrators should update their payroll and administration processes to reflect the new requirements.
Ukraine conflict – guidance
The Pension Regulator has published guidance for trustees on the conflict in Ukraine. The Regulator expects trustees to be vigilant and talk to their advisers about any action which they may need to take, depending on their scheme's investment, risk management or employer covenant exposures. Issues to consider include:
- Any impact on the employer and therefore on the employer
covenant.
- The likely impact on the scheme's investments including
short/medium-term risks – the guidance also sets out how
trustees should approach the question of whether to disinvest from
Russian assets.
- The possible increased risk of cyber attacks and pension scams and whether the scheme's related processes and procedures remain adequate or need to be reviewed.
Trustees should also consider whether to communicate with members to let them know what steps the trustees are taking to manage risks to the scheme.
In addition, the Regulator wants trustees to let it know about any significant issues or challenges that they or their scheme's sponsoring employer are facing as a result of the conflict.
For more information on the investment implications for trustees of the conflict in Ukraine, please see our legal update.
Action
Trustees should speak to their investment advisers and, if necessary their usual contact at Mayer Brown, about what changes may be required to their investment portfolio in light of the conflict in Ukraine.
Fraud compensation levy – levy ceiling
Regulations came into force on 1 April 2022 that increase the fraud compensation levy ceiling to:
- £0.65 per member for authorised master trusts (from
£0.30 per member).
- £1.80 per member for all other occupational pension schemes (from £0.75 per member).
Action
No action required.
Automatic enrolment – proposed regime extension
The government has confirmed that there is not sufficient time remaining in the current parliamentary session for the private member's bill that would extend the automatic enrolment regime to complete the parliamentary process. The government also confirmed that it remains committed to the 2017 automatic enrolment review and will in time introduce or support legislation to take it forward.
Action
No action required.
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Originally published March 2022
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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.