Horizon scanning

FCA/DWP - Pensions Dashboard 

The Pensions Act gives the power to the Secretary of State, MAPS or a party appointed by the Secretary of State to create the regulations for Dashboard.  

The Pensions Dashboards Regulations 2022, as amended by the Pensions Dashboards (Amendment) Regulations 2023, introduced a single “connection deadline” of 31 October 2026 for pension schemes to connect to the dashboard ecosystem. The Department for Work and Pensions (DWP) has now published a revised staged timetable for connection in guidance with the first connections date in April 2025.

On 29 April, the Pension Dashboard Programme published its April 2024 progress report.  It has also published an updated version of the data standards. These standards, covering the data requirements for finding and viewing pensions information, are mandatory for pension providers and schemes to connect to the ecosystem. They are there to help providers and schemes, and third-party organisations connecting on their behalf, to build a common set of message handling tools to receive and reply with data.

HMRC - Increasing the normal minimum pension age  

The normal minimum pension age is increasing for most individuals on 6 April 2028 to age 57. This change affects people born after 6 April 1971. 

The government originally announced their intention to increase the normal minimum pension age from age 55 to 57 from April 2028 back in July 2014. The legislation required to make the change was included in the Finance Act 2022. 

Some individuals have a protected pension age in their pension scheme, which is the right to take benefits before age 57. Individuals don’t need to register this right with HMRC. 

Between 2026 and 2028, the State Pension age is changing to 67. Originally it was proposed the minimum pension age would be linked to State Pension ages, so it was always 10 years earlier, but this was not included in the Finance Act 2022.

Increase in normal minimum pension age in 2028

Consultation on a policy framework to support individuals use their pension savings in decumulation

This is a follow up consultation to the DWP’s earlier Call for Evidence titled ‘Helping savers understand their choices’.  The DWP want to place a duty on trustees to offer decumulation services which are suitable for their scheme members and consistent with the pension freedoms.

• They want schemes to provide a solution or solutions that deliver what scheme members want to achieve from their later life income.
• They want schemes to guide their scheme members towards products and services based on their response to simple questions.
• They want to understand the practical considerations involved with partnering arrangements to provide these solutions.
• They want to establish whether a centralised scheme is needed to deliver decumulation options where trustees don’t offer them directly.
• They want to know what the government can do to encourage a decumulation Collective Defined Contribution (CDC) market to emerge.

Helping savers understand their pension choices

Ending the proliferation of small pots

This is the government response to the call for evidence “addressing the challenge of deferred small pots”.  It proposes a multiple consolidator model as a solution utilising either a clearing house or central registry to match pots and communicate with scheme members. There would be a new authorisation regime to be a consolidator. It proposes this rather than the other option being considered, such as pension follows member.

It also signals a further consultation on “stapling” where an individual's active pension pot is assigned as their pot for life unless they actively choose an alternative provider as a potential next step to reduce the “flow” of small pots.

The promised delivery group for multiple default consolidator has now been established with a main group and 2 supporting groups – one Provider Expert Group and one Technical and Administration group.

The groups will initially  focus on delivery of multiple default consolidator.

Pensions (Extension of Automatic Enrolment) Act 2023

Pensions (Extension of Automatic Enrolment) (no 2) Bill has completed its journey through Parliament and has been granted Royal Assent.

The Pensions (Extension of Automatic Enrolment) Act 2023 creates powers to reduce the age for being automatically enrolled (to age 18) and enable pension saving from the first pound earned.

So, what’s next? The Department for Work and Pensions (DWP) will launch a consultation on implementing the new measures. Watch this space.

Sustainability Disclosure requirements

This is the long-awaited policy statement to the FCA’s sustainability disclosure requirements. This started with a discussion paper over two years ago, a consultation paper, ferocious industry feedback and two subsequent delays to this paper. This is the FCA’s attempt to curb the ongoing threat of greenwashing and introduce universal formality to how sustainable investment strategies are named and marketed.

The main headlines from the policy statement include:

• Four voluntary investment labels to use with sustainable investment strategies: Sustainability Focus/Sustainability Improvers/Sustainability Impact and Sustainability Mixed Goals.
• New naming and marketing rules which apply to both labelled and non-labelled investment solutions.
• A new disclosure regime for labelled solutions. Non-labelled solutions are also in-scope for the disclosure requirements if a solution is named or marketed on sustainability-related credentials. Non-labelled solutions cannot use ‘sustainable’, ‘sustainability’ or ‘impact’ in the fund name.
• A new anti-greenwashing rule applying to all regulated firms. This applies a sustainability lens to the existing FCA requirement that all communications should be clear, fair and not misleading.
• Proposals for portfolio management products and services (i.e. DFM and MPS) are to be tackled in a separate consultation paper expected in early 2024. This should detail how the labels and accompanying disclosure requirements can and should be applied to portfolios.
• There are no specific sustainability-based rules for advisers. The FCA has instead announced that it will be establishing an independent working group to help support advisers on sustainability-related matters.

PS23/16 Sustainability Disclosure Requirements (SDR) and investment labels

Statement of strategy consultation

The Pensions Regulator (TPR) has launched a consultation on the statement of strategy that trustees will need to submit as part of planning and managing their defined benefit (DB) scheme funding. Under the Pension Schemes Act 2021 and new Funding and Investment Strategy (FIS) regulations, from 22 September 2024, trustees will be required to complete a statement of strategy alongside their actuarial valuation that sets out their long-term funding strategy and approach to managing associated risks.

TPR has created statement of strategy templates and is now seeking feedback from trustees and advisers on its proposed approach, including the proposed form of the document, and the type and extent of the information that will need to be submitted. The consultation closes on 16 April 2024.

Statement of strategy consultation

FCA’s Outcome On Thematic Review of Retirement Income Advice

The Financial Conduct Authority (FCA) has written to the Chief Executives of financial advice firms asking them to review their processes when providing retirement income advice after the FCA’s Thematic Review of Retirement Income Advice (TR24/1).

The aim of the review: 

• To gain detailed insights into how the retirement income advice market is functioning.
• Understand whether firms’ advice models consider the specific needs of consumers in decumulation.
• Consider whether consumers are being provided with suitable retirement income advice when accessing benefits built up through pension savings, and take appropriate action to tackle any harms identified.
• Inform FCA’s future areas of focus.

They have also published a Retirement Income Advice Assessment Tool (RIAAT) with instructions and an article on Cashflow modelling (CFM), in connection with the outcome of review.

FCA consultation (CP24/16): The Value for Money Framework ​

​The FCA are consulting on detailed rules and guidance for a new VFM framework for savers invested in default arrangements of workplace DC pension schemes.​ The proposals will:

• ​Require consistent measurement and public disclosure of investment performance, costs, and service quality by firms for all such arrangements against metrics that will allow VFM to be assessed effectively.​
• Enable those overseeing and challenging an arrangement’s value – IGCs and GAA for contract-based schemes – to assess performance against other arrangements on a consistent and objective basis.​
• Require public disclosure of assessment outcomes including a 'red, amber, green' (RAG) VFM rating for each arrangement.​
• Require firms to take specified actions where an arrangement has been assessed as not VFM (red or amber).​
  ​

[GAA means Governance Advisory Arrangement]

​The consultation notes that the VFM metrics for Longstanding workplace arrangements should be compared with that of active schemes when considering RAG ratings.​

​As this is a consultation the commencement date and rules have not been finalised.  The consultation closes on 17 October.

​The FCA has not set an implementation timeline. They will do this based on the consultation feedback, and in consultation with the DWP, who will use this information to inform the Pensions Bill (required to set comparable rules for Trust based schemes).​

CP24/16: The Value for Money Framework