Pensions Bulletin 2024/11

Our viewpoint

LTA abolition – HMRC amends new pensions tax law

With only a few weeks remaining before the new pensions tax regime legislated for by the Finance Act 2024 comes into operation (see Pensions Bulletin 2024/08), HMRC has laid regulations containing a number of technical amendments to this new pensions tax law.

Regulations of this nature had been promised by HMRC and so they are not a surprise, and they do seem to address nearly all of the changes highlighted in various HMRC newsletters (see for example the March 2024 newsletter which we reported on in Pensions Bulletin 2024/10).

Amongst the promised changes that have now been delivered are the following:

  • The removal of the permitted maximum from the new pension commencement excess lump sum (PCELS) authorised payment.  This had been promised by HMRC in its February 2024 newsletter and should now make it much more likely that this mechanism can be used to cash out benefits (on a taxed basis) once either of the member’s new lump sum allowances have been exhausted
  • A complete reworking of the new “Event 24” report by scheme administrators so that it now focuses on those lump sum and lump sum death benefits that are more likely to give rise to a tax charge.  HMRC acknowledged in its December 2023 newsletter that the then Finance Bill provisions did not deliver the policy intent
  • A number of changes to how the new lump sum allowances are established for those who have started to take benefits before 6 April 2024.  This occupied a fair amount of the content of HMRC’s March 2024 newsletter

There are also some adjustments that had not been previously announced.  These include the following:

  • An important new temporary statutory override applicable to the rules of any registered pension scheme so that any rule that imposes a limit on the amount of a benefit payable under the scheme to, or in respect of, a member by reference to the member’s Lifetime Allowance, the standard Lifetime Allowance, or the Lifetime allowance charge, continues to operate from 6 April 2024 as if the abolition of the LTA had not happened.  This and a separate statutory override regarding the PCELS will now cease to operate on 6 April 2029, which should give affected schemes time to make necessary amendments to their rules
  • A “continuity of law” provision, whose purpose appears to ensure that the sweeping, but mainly technical, changes to the pensions tax law being made by the Finance Act 2024 don’t create unintended gaps as requirements are moved from one place to another

The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (SI 2024/356) come into force on 6 April 2024 and have effect for the 2024/25 and subsequent tax years.


We are pleased to see the legislators ride to the rescue of registered pension schemes who might otherwise experience an unintended jump in liabilities on 6 April – albeit at the eleventh hour!  We also welcome the other necessary adjustments to the Finance Act 2024.  However, we are aware of other changes that will need to be made to the new law, and trust that HMRC will tackle them in a timely manner.

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DC value for money initiative results in schemes winding-up

In a short press release, the Pensions Regulator has highlighted the impact that its value for money (VFM) compliance pilot exercise has had on schemes.  This regulatory initiative started with an initial pilot sample of hybrid schemes (see Pensions Bulletin 2023/13).  Now, the Regulator states that as a result of the exercise, 16% of schemes from the pilot have concluded that their schemes do not offer good value for their members and the trustees have therefore decided to wind them up.

The next phase of the initiative will involve analysing data from DC scheme returns.

The background to the pilot exercise is that since October 2021, schemes with DC benefits and total assets of less than £100m have had to do enhanced VFM tests, including comparisons with other larger schemes, to check that they are providing value for their members (see Pensions Bulletin 2021/40).  Schemes that are not doing so are expected to either transfer their members to a better-value scheme and then wind up or immediately improve member benefits.

In connection with this, the press release also notes that the Regulator has already issued a fine of £12,500 against a corporate trustee and that further fines will be issued shortly.


Trustees of schemes with DC benefits and total assets of less than £100m will be wise to heed this news as further evidence (if any was needed) that the Regulator is determined to keep the pressure on such schemes to consolidate their DC provision if they can’t demonstrate they provide member outcomes comparable to the large master trusts.

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“Pension trustee boards lack diversity – but not the desire to improve”

The Pensions Regulator has published the results of its first Trustee diversity and inclusion (D&I) survey which – perhaps unsurprisingly – concludes that pension trustees are less diverse than the overall population when looking at most protected characteristics.

The survey stems from the Regulator’s 2022 action plan and was conducted in July and August 2023 (see Pensions Bulletin 2023/24) and the results – based on responses from 2,197 trustees – indicate that the “typical trustee” is a white, heterosexual, non-disabled male aged 45 or over.  However, the results did also indicate that most trustee boards were seen as diverse in terms of less visible characteristics such as skills, life experience, professional background, cognitive diversity and education.

The survey also highlights that trustees recognise the importance of inclusive and diverse boards, in particular for good decision-making, governance and member outcomes, with the main benefits perceived to be widening the pool of potential candidates, broadening the skill set of the trustee board and providing opportunities to under-represented groups.

A third of schemes had taken action to create a more diverse trustee board and/or planned to do so in the next 12 months, and the same proportion had taken/planned action to encourage greater inclusivity among trustees, with the most widely taken actions relating to trustee recruitment, undertaking training or awareness raising on diversity and inclusion and adopting more inclusive working practices.

The Regulator intends that these results will provide a baseline to measure progress towards ensuring high standards of diversity and inclusion on pension boards.


While the current profile of a “typical trustee” is not really a surprise, it is encouraging to see that the majority of trustees recognise the importance of greater inclusivity and diversity and the benefits that this can bring.

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Carer’s leave and pensions

On 6 April 2024 The Carer’s Leave Regulations 2024 (SI 2024/251) come into force.  They give employees the right to take up to a week’s unpaid leave in any rolling twelve-month period to provide or arrange for care for dependants with a long-term care need.

The Regulations provide a right to return to work with the same pension rights as if they had not been absent.


HR departments and pensions administrators should be aware of the Regulations and procedures should take account of the right to return with the same pension rights.

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This Pensions Bulletin does not constitute advice, nor should it be taken as an authoritative statement of the law.  For further help, please contact David Everett at our London office or the partner who normally advises you.

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