This insight covers Rachael Reeves’ historic Mansion House speech, the FCA’s latest consultation on the regulatory framework for providers of Pensions Dashboard Services and the FRC’s consultation on the UK Stewardship Code.
Mansion House speech – further pension changes announced
The key focus of The Chancellor, Rachel Reeves’, Mansion House speech last Thursday was a commitment to driving UK growth and investment primarily by pooling pension assets and removing regulatory barriers.
The Local Government Pension Scheme fund was the key focus, with the 86 separate funds being merged into a handful of Australian style “megafunds”. The Chancellor predicts the pooled assets will unlock £80 billion of assets to invest into the UK economy, in particular infrastructure and startups.
For more information, please refer to our insight.
TPR and the revised DB funding regime: code in force and digital submission of valuations
The Pensions Act 2004 (Code of Practice) (Defined Benefit Funding) Appointed Day Order 2024 brought the Pensions Regulator’s (TPR) revised DB funding code of practice into effect on 12 November 2024. It applies to actuarial valuations with effective dates on or after 22 September 2024.
TPR’s accompanying press release also confirms that TPR is liaising with several trustees to research and pilot the new digital service that is expected to go live in spring 2025 – this will be used by schemes to submit the new regime valuation documents to TPR. Schemes not being able to submit their prepared documents on time because of a delay in the new system being set up will not be deemed a breach – however, it is important that schemes ensure that their valuation and documents are prepared in accordance with relevant timescales even if submission to TPR is held back.
FCA publishes rules for Pensions Dashboard Service firms
On 7 November 2024, the Financial Conduct Authority (FCA) published Policy Statement PS24/15 covering the new regulatory framework for commercial Pensions Dashboard Service (PDS) firms. Such firms will need to be FCA authorised, have permission from the FCA to provide dashboard services and satisfy relevant requirements.
The policy statement provides details of the FCA’s response to feedback provided to:
- a December 2022 consultation on proposed requirements for PDS firms; and
- a second March 2024 consultation that was published following the introduction of legislation setting up the provision of a PDS as a new FCA regulated activity.
Although it will be some time before commercial providers will enter the market (given the MoneyHelper non-commercial service will be launched first) the FCA wished to produce final rules to allow interested firms oversight of the requirements.
As the PDS will change over time because of the influence of current initiatives, such as open finance, and the Advice Guidance Boundary Review, the PDS rules may also need to evolve in response.
Next steps: The gateway for considering PDS applications will not open until the requisite information from the Government and the Pensions Dashboard Programme on PDS firms is provided.
Consultation on updated UK Stewardship Code
On 11 November 2024, the Financial Reporting Council (the FRC) published its full consultation on an updated UK Stewardship Code (Code). The consultation closes on 19 February 2025. Core proposals include:
- A new stewardship definition; “Stewardship is the responsible allocation, management and oversight of capital to create long-term sustainable value for clients and beneficiaries” alongside ‘supporting language’.
- ‘Streamlined’ Principles which have reporting ‘prompts’ that will focus on areas that are more meaningful.
- At the same time, the amount of reporting needed will be reduced through a division of policy and activity disclosures.
Policy and Context Disclosure (information regarding the organisation, resourcing and activities together with policy links) and an Activities and Outcomes Report (how the Principles have been applied and stewardship exercised during the year) will still have to be formally approved and assessed on signing up.
However, although both will still have to be submitted annually, the Policy and Context Disclosure will only be formally assessed by the FRC every fourth year (unless there have been material changes which the FRC decides requires an interim assessment). The Activities and Outcomes Report will still be assessed annually.
- Principles aimed at the different signatory and service provider types.
- Including guidance for signatories to help them show how they have implemented stewardship and to assist with the updated version of the Code. The FRC suggest that signatories should be able to cross-reference disclosure information from other sources as part of the assessment process.
Next steps: It is expected that the updated Code will be available in H1 2025 and have an effective date of 1 January 2026 meaning that the first reports under the updated version will be submitted to the FRC during 2026.