The government recently published several documents as part of its program to develop legislation aiming to encourage defined benefit (DB) plans to invest in high-growth assets, promote and regulate “superfund” consolidators of DB plans, tackle the proliferation of “small pots” for members of occupational defined contribution (DC) retirement plans and improve “value for money” (VFM) for members of DC retirement plans. For further information, please refer to WTW’s Hot Topics: Chancellor’s Mansion House speech heralds wave of consultations and Mansion House reforms: next steps for UK pension schemes.
Primary pensions legislation is needed to further most of these proposals; however, no such legislation is expected in this final parliamentary session before the general election (the next election is scheduled to be held by January 28, 2025). The Financial Conduct Authority is expected to consult in spring 2024 on draft VFM rules for contract-based DC pension plans. TPR encourages occupational pension plans to engage with this consultation. The government is also expected to work with TPR to develop information for employers to help them select a good plan when looking to fulfill their automatic enrollment obligations. This will focus on “best value and long-term outcomes” rather than the single metric of costs and charges. TPR is also expected to publish new guidance on investing in private markets before the end of 2023 as well as to update its existing DB and DC investment guidance “in due course.” A small pots industry group will be launched in early 2024 to consider the interaction between dashboards and consolidators and will publish its first interim report in spring/summer 2024 with a view to making firm proposals in late 2024. TPR is also expected to host a series of virtual roundtables in 2024 to inform interim guidance it plans to issue to support trustees in developing their decumulation solution(s). Employers should watch for further developments to consider how this might affect existing plans or proposals for future pension provision in the U.K.