Pensions Bulletin 2023/10

Our viewpoint

This Pensions Bulletin covers our normal weekly round-up of regulatory and other developments.  It has been issued ahead of the Chancellor’s 15 March 2023 Budget speech.  See our separate Budget Bulletin for the Budget-related announcements which are of potential relevance to pension schemes and their members.

Pensions Regulator’s Single Code further delayed

The marathon which is the delivery of the Pensions Regulator’s Single Code appears to be experiencing a further delay according to media reports.

It is getting on for four years since the Regulator announced its intention to review its then 15 Codes of Practice, with a view to creating a single shorter and more accessible overall code.  The Regulator’s proposals, which were eventually published in March 2021 (see Pensions Bulletin 2021/12), were a clear demonstration of the merit of doing this – particularly though laying out Code expectations in web form with easy navigation between sections.

We had been expecting the Code to be published last spring and since then various unofficial publication dates have come and gone, the most recent being January 2023.  Now, Pensions Age is reporting the Regulator as saying the “single code, which will be called the General Code, is expected to be published this spring”.  Spring in civil service speak can, of course, mean any time up until Parliament rises for the summer recess, which is 20 July 2023 this year!


It is not clear what is holding up publication.  Our understanding is that the Code has been ready for some time.  All it should take is for a ministerial statement to be made in Parliament announcing its publication in draft form and the Regulator can then publish it on its website.  The Code would then come into force after 40 sitting days have passed in Parliament.

Why can’t this worthwhile project be brought to a conclusion now?

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Pensions Regulator calls on DB scheme trustees to get in touch if the sponsor is in difficulty

Nicola Parish, Executive Director of Frontline Regulation at the Pensions Regulator, has published a plea for trustees of DB schemes to engage with the Regulator promptly if they become aware that the sponsoring employer is in financial difficulty.

Citing the Arcadia case (see Pensions Bulletin 2020/05), on which there has been news recently that the two schemes have agreed a buy-in, Nicola says that the Regulator is “skilled at supporting trustees where necessary to negotiate the right security and other protections for pension savers when companies are struggling or failing”.  She suggests that without the work of the trustees and the Regulator’s and PPF’s involvement, “it is likely members of the Arcadia pension schemes would have suffered a reduction in the benefits originally promised to them”.

She goes on to conclude that in situations where the sponsor is challenged the trustees should:

  • Have a comprehensive financial information-sharing package that includes detailed forward-looking forecasts and how these may vary, which is assessed regularly (ideally quarterly) by appropriately qualified independent covenant advisers, with costs borne by the sponsoring employer
  • Involve the Regulator at an early stage when it becomes clear that trading for a sponsoring employer is challenged, when the viability of a company is uncertain or if there are issues or defaults with other key financial creditors
  • Ensure trustees have the right skills to deal with a distressed situation and have access to expert advisers


This latest blog is set in the context of a steady rise in insolvencies and with sluggish growth in the UK economy at best.  The Regulator is aware that companies are struggling generally, but almost certainly does not know which ones are of particular concern.

Although not necessarily covering all the same ground, there was some legislation promised that would assist the Regulator (and trustees) where employers are considering undertaking certain actions, which could include where they are in financial difficulty.  This notifiable events law has not progressed since the DWP issued its consultation in September 2021 (see Pensions Bulletin 2021/37).  It is not clear why.

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Pensions Regulator issues ERI guidance

The Pensions Regulator has issued new guidance that reminds trustees and employers of the legislative restrictions on using occupational pension scheme assets for employer related investments (ERI) and the risk of criminal prosecution for those who do.

The employer-related investment restrictions are not new, but the Regulator has come across a number of cases recently where individuals have flouted these laws.  This very short guidance is intended to set out clearly the restrictions and responsibilities that apply and as such the Regulator urges all those involved in running pension schemes to read it, understand it and apply it.


This guidance is at a very high level.  The actual legislation is more complex, but instead of spelling this all out the guidance signposts the reader to the 2005 investment regulations.  Unfortunately, this is not an up-to-date exposition of the position as the regulations have been adjusted a number of times since they were issued (for example the recent easement concerning master trusts reported in Pensions Bulletin 2022/28).

While a reminder of the ERI restrictions can do no harm it is notable that recent ERI prosecutions seem to involve blatantly fraudulent activity by people who might be unlikely to be guided by, or even aware of, Pensions Regulator publications.

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Annual allowance mismatch issue tackled in two public sector schemes

Changes have been made to two public sector schemes that resolve the mismatch issue that would have exposed some active members of these schemes to excessive annual allowance tax charges as a result of the spike in inflation that the UK has been experiencing recently.

The schemes affected are the 2013-established Local Government Pension Scheme and the 2015-established NHS Pension Scheme – both of which have a career average revalued earnings (“CARE”) design.

In both schemes, revaluation of a member’s pensionable earnings is currently determined each 1 April based on the annual increase in CPI the previous September.  However, under pensions tax law, the permitted growth in a pension without contributing to the “Pension Input Amount (PIA)” for annual allowance testing, which operates on a tax year basis, references the annual increase in CPI in the September in the prior tax year.

So, for the 2022/23 tax year, a pension may grow 3.1% without contributing to the PIA (based on September 2021 CPI), but the revaluation in both schemes is expected to be 10.1% on 1 April 2023 (based on September 2022 CPI).

Both schemes have now changed their revaluation timing so this is applied on 6 April.  This has the effect of aligning the schemes’ CPI revaluation with that permitted without contributing to the PIA.  So, the 10.1% increase will be tested in the 2023/24 tax year when the permitted increase will also be 10.1%.

For the Local Government scheme amending regulations cover just this revaluation issue.  By contrast separate amending regulations for the NHS scheme cover this and a number of other points, including some relating to legacy schemes.

We expect similar action to be announced in relation to other public sector schemes in the near future.


This mismatch between the inflation uplift applied to benefits and that permitted without contributing to the PIA wasn’t a material issue when inflation was low and stable, but clearly has become pressing as inflation has taken off, with those potentially adversely affected numbering in the tens of thousands.

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DC pots – MP proposes legislation to facilitate single lifetime providers

Yet another Private Member’s Pensions Bill has been introduced to Parliament, this time with the aim of promoting the single lifetime provider approach to addressing the problem of pension savings being built up in disparate DC pots as individuals change jobs.

Conservative MP Anthony Browne says that his Bill will give employees the right to opt out of their company scheme without losing pension contributions.  A new employee would have the right to direct their own and their employer’s contributions to a provider of their choice and so, when they change job, they could make sure their new employer’s contributions go into that same provider.  The Bill would also provide that the employer’s contributions had to be of the same value as the contributions it makes to its existing company scheme, to make sure that employees who opt out are not penalised.

The Pension Contributions Bill was ordered to be printed after having its First Reading on 7 March 2023.  Second Reading has been scheduled for 24 March 2023, shortly before which we should see exactly what it is proposing.


This Bill does nothing for the ‘stock’ of small DC pots that have built up in recent years, largely due to the success of the auto-enrolment policy, but it might help to reduce the ‘flow’ of future small DC pots.  However, it has huge implications for employers who wish to influence the retirement provision they contribute to on behalf of their employees, not to mention opening up all kinds of scam risks unless the destination schemes are on some kind of approved list.

The Bill also seems to be a device to draw out the Government’s thinking on the small pot issue, given that in its consultation launched in January (see Pensions Bulletin 2023/04), the DWP is not looking at the single lifetime provider model.

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It's take two on the Data Protection Bill

The Government has introduced a new Data Protection Bill having decided to withdraw the one it introduced last July (see Pensions Bulletin 2022/28), which made no progress through Parliament after being abruptly halted in September 2022.

The replacement Data Protection and Digital Information (No. 2) Bill was introduced to Parliament on 8 March 2023 by Michelle Donelan, the Secretary of State for Science, Innovation and Technology and, from a comparison of the explanatory notes at least, seems to cover the same ground as the original Bill.  So why was the original Bill withdrawn?  In her written statement it appears that it had some significant flaws, necessitating “an intensive co-design process with business leaders and industry experts” to produce its replacement.


It is clearly embarrassing for a Government Bill to have to have been withdrawn.  The replacement Bill is near identical in structure to the original, but there has been some significant work undertaken at the clause level.

As the new Bill has the same objectives as the original (part of which is to set up an entirely UK-centric system of data protection law post-Brexit), hopefully (as we reported last July) only a few of the proposed changes to data protection law that it contains have the potential to impact current data protection compliance undertaken by various parties in relation to pension schemes.

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