Pensions law trustee update - Q3 2023

Priorities for trustees this quarter are to:

• understand further practical implications of the Lifetime Allowance (LTA) changes, in particular in respect of members with enhanced or fixed protection and tax changes on lump sum payments;
• consider the guidance issued by the Pensions Regulator (Regulator) on the practical steps trustees should be taking to manage risks when using leveraged liability-driven investments (LDI). In particular, LDI arrangements that trustees are investing in should have a market stress buffer of at least 250 bps;
• consider the guidance the Regulator has issued to improve equality, diversity and inclusion (EDI) in the appointment of trustees; and
• be aware that the Defined Benefit Funding Code of Practice (Code) has been delayed until April 2024.

In addition, trustees should be aware that:

• the Regulator is undertaking a new initiative to check that trustees of defined contribution (DC) schemes with assets under management of less than £100 million are complying with new value for member regulations that came into force in October 2021; and
• the Regulator is going to check that trustees of schemes with 100 or more members are complying with their reporting obligations around environmental, social and governance (ESG) considerations.