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Issues affecting all schemes

General Code – in force

The General Code came into force on 28 March 2024 and the ten codes that it replaces have been revoked. For more information on the Code, please see our legal update.

Action

Trustees should consider what changes they will need to make to their scheme's governance processes to comply with the effective system of governance requirements and the other matters in the Code.

New lump sum regime – regulations and guidance

Regulations came into force on 6 April 2024 that make a range of changes to the legislation governing the new lump sum regime, including:

  • Removal of the "permitted maximum" for a pension commencement excess lump sum.
  • Addition of a provision whereby any scheme rules which impose a limit of the amount of a benefit payable to or in respect of a member by reference to the member's lifetime allowance (LTA), the standard LTA or the LTA charge are not affected by the changes made by the Finance Act 2024. This provision will cease to have effect at the end of the 2028/29 tax year.
  • Confirmation that, where entitlement to a lump sum arises prior to 6 April 2024, but payment is made on or after 6 April 2024, the lump sum is to be taxed in accordance with the legislation as it stood on 5 April 2024.

In addition, HMRC has published further guidance on the abolition of the LTA and the new lump sum regime:

As well as FAQs on a wide range of topics, these note that further clarificatory changes to the legislation will be made.

Action

Trustees and administrators should continue to implement changes arising from the abolition of the LTA and introduction of the new lump sum regime. They should also monitor publication of the further changes to the legislation and any further HMRC guidance.

Pensions dashboards – staged connection timetable

The government has published statutory guidance setting out the staged timetable for connection to the dashboards ecosystem. Although the statutory deadline for connection is 31 October 2026, schemes are required to have regard to this guidance in complying with their duty to connect i.e. schemes are encouraged to connect by the relevant date set out in the guidance unless there are exceptional circumstances which prevent them from doing so. The timetable is based on scheme size and type. It will start with the largest DC schemes which will be encouraged to connect by 30 April 2025. For more information, please see our legal update.

In addition, the Pensions Dashboards Programme has published:

  • FAQs on useful guidance and resources to support schemes in their dashboards preparations.
  • A blog post on some of the common queries it has received recently

Action

Trustees and administrators should establish their scheme's connection date under the statutory guidance and consider whether there are any circumstances which will prevent the scheme from connecting by that date.

General levy – new rates

The government has responded to its consultation on proposed changes to the structure and rates of the general levy on occupational and personal pension schemes in light of the ongoing deficit in levy funding. The government has decided to proceed with the second of its three proposed options under which the current levy structure will be retained and levy rates will be increased by 6.5% per year for all schemes. This will bring the cumulative deficit back into a compliant level by 2031. Regulations making the changes came into force on 1 April 2024.

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Originally Published 9 April 2024

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.