The trustee agenda: key developments so far in 2023

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In our last Entrust article we focused on what lay ahead for trustees, employers and pension advisers during 2023. In this edition, we take a look at what has happened so far this year.

Throughout this article we have included relevant links to more in-depth information that has been produced by our colleagues in the Gateley Legal pensions team and a note where action is or may be required.

Key cases

Scheme actuary’s role in shortfall rule

In the case of Railways Pension Trustee Company Ltd v Atos IT Services UK Ltd & another [2022], the High Court ruled that the words “as determined by the actuary” in the Railways Pension Scheme’s shortfall rule involved “the exercise of judgment and discretion” rather than the actuary simply carrying out a ‘mathematical calculation’ to increase contributions. The Court also ruled upon the meaning of “arrangements to make good the shortfall”, determining that these words meant that the shortfall did not need to be removed entirely.

Although the judgment is case-specific, it has general relevance to many schemes which rules often include reference to ‘determined by the actuary’, for example, in respect of augmentations, contributions commutation and early and late retirement factors. See Gateley’s Insight for a full case summary.


Trustees should note the meaning of the term for future reference – determined by the actuary involves the actuary making a judgment and having discretion.

‘World first’ climate risk claim – Shell plc

ClientEarth has issued a ‘world-first’ claim in the High Court against the board of directors of Shell plc for not aligning the company’s energy transition strategy with the Paris Agreement and a move to net zero. The directors are alleged to have breached their duty under the Companies Act 2006 to promote the success of the company for the benefit of members. Gateley’s Insight contains further details.

Meaning of protected pension age requirement for an actual or prospective right

In Devon and Somerset Fire and Rescue Authority v Howell [2023] EWHC 257 (Ch) the High Court has provided useful confirmation of HMRC’s understanding of the meaning of having an ‘actual or prospective right’ to pension benefits in the context of protected pension ages (PPAs).

Under the Finance Act 2004, normal minimum pension age (NMPA) is the earliest age at which members can access pension benefits without the payment being unauthorised (except for ill-health and members that have a PPA). NMPA has been 55 since 6 April 2010 (50 prior to this) and is due to increase to 57 in April 2028 (see our Insight).

Certain conditions must be met for a member to have a PPA including an entitlement condition, that the member has an “actual or prospective right…to any benefit from an age of less than…” 55 in this case (and 57 in respect of the 2028 PPA regime).

The court had to determine whether a right to take a pension from age 50 conditional on the fire and rescue authority’s permission was an ‘actual or prospective’ right. The court agreed with the Finance Act 2004’s explanatory notes and HMRC guidance that say that a requirement for third-party consent means that the entitlement condition is not satisfied. It decided that the requirement for permission was the same as consent and meant that the member did not have a prospective right to retire earlier than age 55 without the payment of pension being unauthorised.

The court also provided additional guidance on the ‘actual or prospective right’ meaning. Further details can be found in Gateley’s case summary.


If they have not done so already, trustees should check their scheme’s rules to see whether normal minimum pension age will increase to 57 on and from 6 April 2028, update relevant scheme documents if necessary and communicate with members accordingly.

The Pensions Regulator (the Regulator)

New Chief Executive and departure of David Fairs

The Regulator has confirmed the appointment of Nausicaa Delfas as the new Chief Executive as from March 2023. She will replace Charles Counsell. Also, David Fairs, the current Executive Director of Regulatory Policy, Analysis and Advice, will be leaving the Regulator role this March.

ESG and climate change campaign

The Regulator has announced a campaign to check that trustees are meeting ESG and climate change reporting obligations as regards schemes:

  • that are required to produce a statement of investment principles (a SIP) including in it details on financially material ESG and climate factors, producing an implementation statement and publishing both documents; and
  • with relevant assets of £1bn publishing a climate change report each year.

The campaign will also involve the Regulator reviewing a cross-section of SIPs and implementation statements and publishing the outcome.


Trustees of schemes that have climate change reporting obligations should already be meeting what the Regulator refers to as the ‘basic requirements’, in which case no action should be required. However, they should look out for what the Regulator has to say on the quality of the disclosures and make sure they comply with the ESG and stewardship parts of the new single code of practice when this comes into effect.

The Pension Protection Fund (the PPF)

PPF levy ceiling for 2023/24 set at £1.2bn

The PPF levy ceiling for the 2023/24 financial year has been set at £1,246,964,705. The ceiling increases each year according to earnings’ increases, but the PPF has always collected much less than this maximum amount. The levy for the 2023/24 financial year will be £200m.

Liability-driven investment (LDI)

FCA, PPF and Regulator correspondence

The Financial Conduct Authority (the FCA), the PPF and the Regulator have all issued correspondence as part of the Work and Pensions Committee’s enquiry into liability-driven investment (LDI).

Of particular note is the Regulator’s letter which explains that the Regulator will need to collect additional data on LDI to effectively monitor the use of LDI and that it may do this through a new notifiable event, for example, requiring notification where minimum buffer levels are not met.

Further details of all three letters are provided in Gateley’s Insight.

House of Lords’ recommendations

The House of Lords’ Industry and Regulators Committee has recommended several actions to ‘improve regulation’ on LDI including: changes to the pensions accounting system for immature defined benefit (DB) pension schemes; reviewing investment regulations to identify whether the use of leverage and derivatives should be more tightly regulated; and bringing investment consultants within the remit of the FCA. Further details can be found in Gateley’s Insight.


Schemes using LDI will already have liaised with advisers regarding the impact of the recent gilt market volatility including the need to set LDI financial buffers in line with the Regulator’s 30 November 2022 guidance and to review the Scheme’s governance processes to ensure that they are sufficiently robust enough to deal with future adverse events of a similar nature. They should continue to monitor the markets and look out for future regulatory developments on this area.

Defined contribution

DC/CDC: Government plans to ‘start closing the pensions inequality gap’

On 30 January 2023, the DWP announced five defined contribution (DC) related measures which aim to ‘start closing the pensions inequality gap’ between DB and DC pension provision. The measures are not new – they have just been collated under one premise, that of creating ‘fairer, more predictable, and better-run pensions’.

Measure 1: Joint consultation on a new value for money (VfM) framework. The DWP feel that the current market makes it hard for DC schemes to assess VfM. The framework will initially act as an add-on to the existing value for members assessments but will in time replace these – schemes will need to consider the usual investment performance, costs and charges and service quality.

Measure 2: Response to the consultation on broadening DC investment opportunities – subject to Parliamentary approval, the Government will go ahead with statutory changes in Spring that will require relevant DC schemes to:

  • disclose and explain their policy on illiquid investment through the statement of investment principles the first time that the SIP is revised after 1 October 2023 or by 1 October 2024 at the latest; and
  • their default asset allocation in the annual chair’s statement beginning with the first scheme year ending after 1 October 2023; and
  • allow trustees to invest in arrangements that include ‘well designed’ performance fees.

Trustees will need to take into account draft statutory guidance in respect of the asset allocation disclosures and performance-based fees.

Measure 3: Consultation on addressing the challenge of deferred small pots in respect of which the Government are looking at two solutions: (1) a default consolidator model; and (2) a ‘pot follows member’ model; both with member opt-out options.

Measure 4: Report on understanding member engagement with workplace pensions.

Measure 5: Consultation on Collective Defined Contribution (CDC) schemes – the Government is consulting on allowing multi-employer and master trust CDC schemes and how the CDC framework can provide additional design flexibility.

The consultation also looks at how CDC as a decumulation only option might work. These arrangements would give members coming up to retirement an income product that permits them to share investment and longevity risk.

All of the consultations close on 27 March 2023. Further details can be found in Gateley’s insight.


Trustees should familiarise themselves with the new measures although only the ‘broadening investment opportunities’ consultation will require specific action for in-scope schemes at the minute. Trustees should begin preparing for the new illiquid investment and asset allocation requirements and, if they wish to invest in performance fee arrangements that are excluded from the charge cap, ensure that the fees meet the relevant exemption conditions.


Earnings trigger and qualifying earnings band to remain same

The DWP has confirmed that for the 2022/23 tax year the earnings trigger will remain fixed at £10,000, and both the lower and upper ends of the qualifying earnings band will stay the same (£6,240 and £50,270).

Automatic Enrolment Bill – progression through Parliament

The Private Members’ Pensions (Extension of Automatic Enrolment) (No. 2) Bill had its first reading in the House of Commons on 27 February 2023 and commenced its second reading on 3 March 2023. The explanatory notes explain that the Bill introduces regulatory powers which will allow reduction of the age at which eligible workers must be enrolled from 22 to 18 and a reduction or repeal of the Lower Earnings Limit of the qualifying earnings band.

Regulator statement urging trustees to support DC savers during present economic difficulties

The Regulator’s guidance statement urges trustees to support DC savers during the current economic challenges. The statement forms an ‘action checklist’ for trustees and covers three key areas; (1) reviewing governance and investment arrangements, (2) taking steps to support savers, and (3) communicating with members. Further details can be found in Gateley’s Insight.


Trustees should review and action the statement appropriately.

Other developments

Delay to start of pensions dashboards

On 2 March 2023, the Government announced that the Pensions Dashboards Programme will be delayed and that there will be amended timing obligations which the DWP will legislate for as soon as possible. Although the regulatory framework ‘remains fit for purpose’ more time is required to implement the dashboards architecture.


Trustees should look out for amended staging dates and see how these affect their schemes.

FCA requesting trustees report pension scam concerns

The FCA has set up a new webpage requesting that pension schemes report ‘serious concerns’ about pension transfers to them. This would include the presence of a number of red or amber flags (see Gateley’s In-depth Insight), refusal of a transfer and other circumstances the FCA would like to hear about. The webpage gives more detail regarding what schemes should consider and how to report. See also Gateley’s Insight.


Reporting to the FCA is not a legal requirement but the Regulator does reference doing this in its pension scams guidance. Therefore, schemes should make a report in appropriate circumstances.

PASA guidance on data readiness for insurer transactions

The Pensions Administration Standards Association has published guidance on preparing scheme data for buy-ins and buy-outs with insurer providers. Gateley’s Insight has further details.


The importance of having high quality data is also important for good scheme governance and to meet pensions dashboards requirements. The Regulator expects schemes to review their data at least once a year and improve it where issues are identified.

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