UK Pensions - Autumn Statement 2023: Implications for pension schemes

The Chancellor of the Exchequer, Jeremy Hunt, has presented his Autumn Statement to Parliament. From a pensions perspective, the Autumn Statement largely focusses on the same themes as July’s Mansion House speech, with a package of measures aimed at reforming the pensions market to unlock investment into high growth sectors and generate increased returns for savers. 

Key points to note include the following:

• Abolition of the lifetime allowance: As expected, the Government will legislate in the Autumn Finance Bill 2023 to remove the lifetime allowance. The statement confirms that this will take effect from 6 April 2024.
• Options for DB schemes: The Government has published a response to its call for evidence on options for defined benefit (DB) schemes. This confirms that the Government will launch a consultation this winter on measures to make it easier to repay surpluses to employers and on options for DB schemes unattractive to commercial providers to consolidate into a new statutory vehicle run by the Pension Protection Fund. It will also consider the viability of a 100% PPF underpin for DB schemes that opt to pay a higher levy. The statement confirms that the authorised surplus payments charge will be reduced from 35% to 25% from 6 April 2024.
• Trustee skills, capability and culture: The Government has published a response to its call for evidence on trustee skills, capability and culture. This confirms that the Pensions Regulator will put in place a register of trustees, as well as publishing additional guidance in relation to investment decisions and alternative assets. The Government will also work with the Regulator to provide further information for employers on what factors should be assessed when they are selecting a pension scheme.
• DC decumulation: The Government has published a response to its consultation on a decumulation framework to support individuals at the point when they access their defined contribution (DC) pension savings. This confirms the Government’s intention to impose duties on trustees to offer decumulation services and products at an appropriate quality and price when savers access their pension. Schemes will also be required to devise a default decumulation solution, based on the general profile of their members, that a member would be placed into if they access their pension without making an active choice on how to access their pension.
• Small pots: The Government has published a response to the Government’s consultation on a proposed automated consolidation solution for small pots, which confirms that it will introduce a multiple default consolidator model. Under this model, deferred small pots which meet the eligibility criteria for automatic consolidation will transfer automatically to one of a number of consolidators. The response also includes a call for evidence on a lifetime provider model, which would aim to allow individuals to move towards having one pension pot for life.
• Value for money: There is no update on the timing for the primary legislation required to implement the new value for money framework for DC schemes. However, the statement confirms that the FCA will consult on rules for contract-based schemes in spring 2024.
• Master trusts: The Government has published a review of the master trusts market, five years on from the master trusts authorisation and supervision regime coming into force. Amongst other things, the report looks at areas where the regime may need to be updated. 

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