This week in pensions: 26-30 September

While pensions may have a reputation for being on the slow and boring side, the past week has proven it is anything but.

Pensions was pushed into the number one news spot after the Bank of England announced plans for temporary and targeted purchases in the gilt market at an "urgent pace", in an effort to "restore orderly market conditions".

The intervention was introduced to prevent a “viscous spiral”, as gilt yields faced ‘unprecedented’ increases amid the market reaction to the Chancellor’s fiscal statement, prompting “huge demand” for cash to support derivative structures popular amongst pension schemes.

The news was welcomed by The Pensions Regulator (TPR), which confirmed that it is also “closely” monitoring the financial market situation and its impact on defined benefit (DB) pension funding levels.

While the mini-Budget has had a significant impact on the pensions industry, it may not be in the way that industry experts would have hoped, with many urging the government to consider pension tax reforms, particularly after figures from HMRC revealed an 11 per cent increase in LTA charges in 2020/21.

The past week also represented the 10-year anniversary for auto-enrolment, although warning signs may be flashing, with record flexible pension withdrawals in Q2 2022 highlighted as evidence of the impact of the cost-of-living crisis on pension saving, while industry research has highlighted the limitations of inertia in AE.

The Work and Pensions Committee's inquiry also found that while auto-enrolment has helped savers, more than 60 per cent of people are at risk of missing out on an adequate standard of living in retirement.

In light of this, the WPC has called on the government to "urgently" boost pension saving rates "before it is too late", and to introduce legislation for the 2017 Auto Enrolment Review reforms “no later than the beginning of the next session of parliament”.

The past week has also been a busy one for regulators, as TPR launched a new Equality, Diversity and Inclusion action plan after research revealed that just 10 per cent of defined benefit (DB) and 14 per cent of defined contribution (DC) schemes record any trustee diversity data.

The regulator also warned employers to ensure they are complying with their ongoing automatic enrolment duties, after inspections revealed a number of common administrative errors.

In addition to this, TPR has updated its climate guidance for pension trustees ahead of new Paris-aligned disclosure reporting requirements, and urged pension schemes to prepare for the introduction of pensions dashboards “now”.

The Financial Conduct Authority has said that it is looking at “transforming” the advice and guidance rules, with plans to carry out a holistic review of the boundary between guidance and advice in preparation for this.

The Pension Protection Fund (PPF) has also announced a significant reduction in its 2023/24 levy, with all PPF levy payers expected to see a reduction in their levy next year as a result.

Despite the amount of activity seen in the pensions space over the past week, one area that is yet to be confirmed is the new Pensions Minister, who will surely have to hit the ground running in light of the growing pressures facing the industry.

With new requirements on climate reporting and simpler annual benefits statement to come into force from tomorrow, and many of the issues from the past week expected to have a long-term impact for pension providers, trustees will have a busy time ahead.

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