Following the epic year in pensions that was 2023, could 2024 ever live up to expectations? It was always going to be a tough act to follow, but with a new government taking the reins in a landslide victory in July, there were sure to be some surprises along the way, along with progress made on those initiatives which had cross-party support; pensions dashboards, anyone?
Join us for a month-by-month run down of key moments in the 2024 calendar, before we gaze into our crystal ball to see what 2025 might have in store.
In a typically slow start to the year, schemes did receive the welcome news that the Pension Regulator’s highly anticipated General Code of Practice had been laid in Parliament where it would reside for 40 days (and presumably 40 nights).
Later that month, the government published its response to the consultation on the draft Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2023, a mere 14 months after the consultation had closed. The regulations, which came into force in April, require Defined Benefit (DB) schemes to have a funding and investment strategy, and submit it to the Pensions Regulator (TPR).
The government reaffirmed its commitment to the reduction in small pension pots by launching an industry delivery group to provide recommendations on implementing the proposed default consolidator approach. The group was supported throughout the year by two expert panels, one of which Heywood was privileged enough to join.
2023’s call for evidence on Options for DB schemes was followed in early 2024 by a formal consultation from the Department for Work & Pensions (DWP), seeking views on options for ‘surplus extraction’ and a public sector consolidator. While GOV.UK informs us that feedback is being analysed, it remains to be seen whether the current Government has appetite and resource to take this forward.
“An Act to make provision in connection with finance” (otherwise known as the Finance Act 2024), received Royal Assent on 22 February. The Act contained, at very short notice, the necessary provisions to fully abolish the Lifetime Allowance (LTA) and replace it with two new lump sum allowances from 6 April.
As the start of the tax year loomed large, the then Pensions Minister, Paul Maynard, promised the industry a busy 12 months ahead, commenting at the PLSA Investment Conference: "Now you may have thought 2023 was busy, 2024 will be even busier, both for politicians for reasons that might be obvious to you, but also for consultation response writers."
Armed with the big red briefcase, the extant Chancellor of the Exchequer delivered the Spring Budget on 6 March, reiterating plans to unlock investment in UK growth through pension funds and ensure that schemes are providing Value for Money (VfM), and consequently Value for Members, through a regulatory framework.
Other big ticket items in March included the publication of DWP guidance setting out a staged timetable of pensions dashboards connection dates, following removal of the initial legislative schedule from the dashboards regulations, and TPR’s General Code coming into force at the end of the month after its 40 day (and night) hiatus.
From 6 April, the abolition of the LTA became official, it having just reached legal drinking age. Two new replacement allowances – the Lump Sum Allowance (LSA) and the Lump Sum Death Benefit Allowance (LSDBA) became effective from the same date. The amending regulations provided for a plethora of revisions to well-embedded overriding legislation, not all of which were entirely effective, leading to some industry experts coining it a “patch and mend job”[1].
The Government Actuary’s Department (GAD) published a swathe of GAD valuation reports on Public Sector Pension Schemes, the majority confirming that in-built cost control mechanisms had been breached at either end of the spectrum, due to scheme assumptions not being realised (floor breach) or wider economic events (ceiling breach).
Industry feathers were ruffled in May by the announcement that a General Election would be held on 4 July, with the PLSA quick to set out its wish list for the eventual victors, with a primary aim of securing financial stability for members in retirement.
In a busy month for those involved in pensions politics, all parties published their 2024 manifestos, with the single point of agreement appearing to be maintenance of the State Pension triple lock. In a welcome about-turn, the Labour party discarded reported plans to reinstate the LTA, given the legislative debacle of removing it just two short months ago. To that end, the Finance Act Part Deux was published, making further amendments to the Finance Act 2004 pursuant to the removal of the allowance.
All eyes were focused on the polls, with a resounding victory for Labour on 4 July ending a 14-year Conservative reign. Industry speculators welcomed clarity on the promised Pensions Review and urged the new government to ensure necessary corrections to the amending LTA legislation were not further delayed.
Thoughts then turned to the appointment of roles to the new Prime Minister’s cabinet, with Liz Kendall confirmed as Secretary of State for Work and Pensions and, in a bold move, Emma Reynolds appointed as the new Pensions Minister in a role spanning both HM Treasury and DWP, bringing hope of a more joined up approach to pensions policy across the Departments.
On 17 July, the King’s Speech 2024 announced a Pension Schemes Bill which would bring to fruition many of the proposals outlined in 2023’s Mansion House reforms, supporting UK economic stability and growth and boosting members' retirement coffers by £11,000 over an average working life.
Shortly afterwards, the newly appointed first female Chancellor, Rachel Reeves, launched the first phase of a “landmark” Pensions Review, focusing on investments both in the private sector and the Local Government Pension Scheme (LGPS). The proposed second phase would further consider improvement of pension outcomes and increasing UK investments.
In another potential landmark moment, the Court of Appeal upheld the High Court’s 2023 determination in the Virgin Media v NTL case, concerning failure to possess (or locate) written confirmation from an actuary that amendments to a scheme meant it still passed the ‘reference scheme test’ in relation to contracted-out rights, in contravention of Section 37 of the Pension Schemes Act 1993. Commentators expressed concern that the judgment will have far-reaching implications for DB schemes.
The Financial Conduct Authority (FCA) took advantage of parliamentary recess to launch its consultation on the VfM framework announced in the Spring Budget and in an otherwise quiet month, the terms of reference for phase one of the pensions review were also published.
For Public Sector Pension Schemes (excluding LGPS), August 2024 was the first time that members could receive an Annual Benefit Statement showing the impact of the first phase of the McCloud age discrimination remedy – reinstatement of final salary scheme service from 1 April 2015 to 31 March 2022. In some cases, members received a new Remediable Service Statement instead, illustrating the comparison of final salary v CARE benefits for that same period, ahead of the legislative deadline of 31 March 2025.
With the first dashboards staging dates for the very largest schemes now only seven months away, TPR published a pensions dashboards compliance and enforcement policy, setting out its expectations of schemes’ compliance with dashboards’ duties and its enforcement approach to non-compliance.
Illustrating a clear desire to work at pace, the government launched a 3-week call for evidence to inform the first phase of its Pensions Review, seeking views on scale and consolidation, cost v value, and investing in the UK.
And, proving (finally!) that pensions aren’t boring, Gemma Collins of The Only Way Is Essex fame, picked up the Pension Attention megaphone for the third annual awareness campaign, urging all the huns out there to concentrate on planning for retirement, instead of worrying about wrinkles!
On 7 October, Royal Mail launched the UK’s first Collective Defined Contribution (CDC) scheme, providing over 100,000 employees with a pension for life and cash lump sum on retirement, and potentially ushering in a new dawn for pensions provision in this country, with DWP subsequently launching a consultation on legislating for CDC schemes to be more widely accessible to savers.
On 22 October, the Pensions Minister made a written statement reaffirming the government’s commitment to pensions dashboards. The statement went on to confirm that efforts would be focused on launching the non-commercial MoneyHelper dashboard, before facilitation of commercial qualifying pensions dashboard services (QPDS) begins.
Despite media and industry speculation regarding possible pensions tax reforms in the Autumn Budget, the Chancellor’s speech on 30 October was relatively light touch, with measures to be brought forward to include pensions within the scope of Inheritance Tax from 2027, and changes for overseas transfers. As expected, the state pension triple lock was also confirmed.
A technical consultation on the requirement for pension scheme administrators to report and pay Inheritance Tax due on pensions was launched by HMRC on the same day.
The Chancellor’s first Mansion House speech was delivered on 14 November, two weeks after the Autumn Budget. Building on the now familiar themes of economic stability and growth through local investment and reform, the government published the interim report on phase one of the Pensions Review, spring boarding two consultations on those initial outcomes: proposals to limit Defined Contribution (DC) schemes to a minimum size and maximum number through legislation thereby “unlocking the UK pensions market through investment growth”, and strengthening the management of LGPS investments, ensuring the scheme is “fit for the future”.
As schemes gradually started to wind down for the season and the promise of a mince pie and a sherry or two, the government announced a delay to phase two of the Pensions Review, ostensibly because improving retirement adequacy may inevitably mean an increase in employer pension contributions, hot on the heels of a National Insurance hike in the recent budget. Disappointingly, no firm timescales were given as to when this may be reinstated.
And that’s a wrap! While these snippets have spanned the entire UK pension landscape, to find out what the year held for Heywood, watch this short video from our CEO, Sian Jones.
I am indebted to Pendragon for their Perspective News Archive which has been invaluable in putting this pensions reel together (not an ad!). While researching the content, other top recurring themes which didn’t make the (long) short-list were:
For what’s to come in 2025, importantly for us, we celebrate 50 years of Heywood!
For those involved with public sector pensions, even more McCloud, as the deadline for issuing Remediable Service Statements fast approaches.
For DC schemes and the LGPS, progression of the Pension Schemes Bill and Mansion House proposals – consolidation and decumulation; for DB schemes, treatment of surpluses, and fall out from the Virgin Media ruling.
Pensions dashboards staging commences for all schemes, although the Dashboards Available Point (DAP) may still be some time off.
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[1] Abolition of Lifetime Allowance means a ‘patch and mend job’ through pension regulations ahead of new tax year – David Everett, LCP