Pensions news: what you may have missed this autumn

Estimated reading time: 6 minutes

From Brexit to Scams via Inflation– Head of Pensions Research, Tyron Potts, maps out everything you may have missed in the world of pensions this Autumn.


Legislative developments directly affecting pension schemes have been few and far between in recent months, with Brexit-related issues dominating the political landscape. A number of documents aimed at pension scheme trustees, sponsors and members have been published recently, giving guidance and/or reassurance as we approach the formal Brexit deadline of 31 October (at time of writing). These include:

  • In August, the Department for Work and Pensions (DWP) published updated guidance in respect of the payment of occupational pension benefits to European Union (EU) citizens in the UK and UK nationals in the EU in a ‘no deal’ scenario. TPR has said it expects trustees to familiarise themselves with the guidance, in order to ensure continuity of benefits. 
  • The Pensions and Lifetime Savings Association (PLSA) has published a Pension Trustee’s Brexit to-do-list.

Little has changed since The Pensions Regulator (TPR) issued its statement in January 2019 – key messages from which were reiterated via its 2019 Annual Funding Statement.


While we await new powers for TPR in relation to scheme funding (and a new code of practice some time in 2020), trustees still need to be mindful that they will soon be required to formalise a Long-Term Objective (LTO) - also referred to as a Long-Term Funding Target (LTFT).

In the meantime, yields on bonds globally have fallen materially in recent months – for example at the 20-year point on UK Government Gilts curve, yields have fallen by around 0.7% since 1 March 2019, which could translate to an approximate increase in pension scheme liabilities of 15% where relevant risks are unhedged and liabilities are measured relative to Gilt yields.    

Trustees may therefore wish to discuss with their advisors, how these market movements have impacted their scheme’s funding position – and the extent to which the scheme is exposed to ‘interest rate risk’. Similarly, sponsoring employers will want to understand the impact on the obligations reported in their corporate accounts.

"Trustees still need to be mindful that they will soon be required to formalise a Long-Term Objective (LTO)."

GMP Equalisation

The GMP Equalisation Working Group (GMPEWG), has published the first in a series of “good practice” guides for UK pension schemes approaching GMP equalisation. The guide follows the working group’s ‘call to action’ in which it urged pension scheme trustees to review the likely data requirements for a Guaranteed Minimum Pension (GMP) equalisation project.

The document offers practical guidance on the methods to correct past underpayments and to equalise benefits going forward, including worked examples.  It also contains a section on “common unanswered issues”, including in relation to transfers-in, anti-franking and survivors’ pensions.

Our research shows that many schemes’ preparations for dealing with GMP equalisation are well underway – with 50% of schemes surveyed having taken steps to adjust benefits, or have a formal plan in place.  

Future publications from the GMPEWG will set out guide schemes in dealing with common issues in the areas of data, transactions and taxation.


The Government is proposing to make significant changes to the Retail Price Index (RPI) measure of inflation. These changes could reduce future benefit payments from DB schemes, but would also affect the income from inflation-linked government bonds.

The announcement follows on from a review of the RPI published by the House of Lords in January of this year in which, it recommended that RPI was statistically flawed and should be revised.  The UK Statistics Authority has now responded by suggesting RPI should be altered altogether so it is effectively brought into line with the Consumer Prices (including Housing Costs) index (CPIH) – the Government’s preferred method of measuring inflation and expected to be around 1% pa annum lower than RPI increases on average.

The Chancellor of the Exchequer has indicated that he is open to introducing this change between 2025 and 2030 but that he would like to consult on the implications early next year.  

Preparations for dealing with GMP equalisation are well underway


of schemes surveyed having taken steps to adjust benefits, or have a formal plan in place.

Investment Governance

From 1 October, Defined Contribution (DC) and Defined Benefit (DB) schemes will be required to incorporate Environmental, Social and Governance (ESG) considerations into their Statements of Investment Principles (SIPs).    Next year, schemes will also be required to include further details in their SIPs about how they engage with and remunerate their asset managers. DB schemes will also be required to publish their SIPs online from October 2020 (DC schemes are already required to do this from 1 October 2019).

The Pensions Regulator (TPR) has now updated its investment guidance for DB schemes to reflect these new obligations and suggests trustees may find it useful to re-acquaint themselves with the guidance as a whole.

Meanwhile, following publication of the Competition and Markets Authority (CMA) Order in June, TPR is consulting on draft guidance for trustees.   The CMA order requires trustees to set “strategic objectives” for its investment consultants - which will need to be in place by 10 December 2019 – and measure performance against them annually.  Compliance will have to be reported to TPR via the annual Scheme Return.  

Fiduciary Management appointments will also have to be reviewed and, where the selection process was not competitive, may have to be re-tendered within five years.  

TPR’s draft guidance appears to go a step further than the CMA order, and could extend the formal objective requirement to other adviser appointments - which may include fiduciary managers, covenant advisers and scheme actuaries. At this stage however, the guidance is under consultation and may change following industry feedback.

PPF Levies

The Pension Protection Fund (PPF) has published its 2020/21 Levy consultation.  The consultation and associated technical papers set out how the PPF intends to calculate schemes’ levies due to invoiced in Autumn 2020.  

The PPF isn’t planning any major changes to the levy approach this year.  This is the third year in the current levy triennium, during which time the PPF’s policy is to try to keep levies relatively stable without making unnecessary changes to the methodology. Next year, a more detailed review will focus on the “measurement of insolvency risk” and in particular, the return to Dun & Bradstreet (D&B) as insolvency score provider.

Overall, the PPF expects that falling Gilt yields (see ‘Funding’ above) will lead to increases in schemes’ liabilities on the PPF standard “Section 179” assumptions, and average levies rising by around 8% compared with 2019/20.  Individual scheme circumstances will however, dictate how specific levy invoices will compare.

Key deadlines / dates to note in relation to the 2020/21 levy include:

  • Experian scores and credit ratings will be based on an average of month-end scores between 30 April 2019 and 31 March 2020.
  • Scheme Return data must be submitted on TPR’s Exchange system by midnight on 31 March 2020 to affect the 2020/21 levy.  Contingent assets, asset-backed contributions and mortgage exclusions must also be certified by 31 March 2020.
  • Deficit reduction contributions (paid since the last formal PPF valuation) may be certified up until 5pm on 30 April 2020.
  • Block transfers must be certified by 30 June 2020. 

Invoices for 2019/20 PPF levies are being issued now.  


The Pension Scams Industry Group (PSIG) has updated its Code of Good Practice (to version 2.1) for trustees and administrators processing members’ transfer requests.  

The revised guidance includes expanded information relating to the ban on “cold-calling” from January 2019 and the TPR / FCA joint “ScamSmart” initiative. The guidance also reflects the results of PSIG’s scams survey undertaken last year and revised Action Fraud reporting guidance.

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