The Pensions & Lifetime Savings team here at Burges Salmon has been closely following the UK’s general election and recently posted this passle on what the pension industry should expect from the new Labour Government.

But what are the particular implications for Employers?

Ahead of tomorrow’s Kings Speech, which we hope will offer greater clarity on the new Government’s immediate pensions priorities, here are some thoughts on key topics that Employers should be looking out for:

The DB Funding Code

Scheme funding is of course a critical issue for employers with DB pension schemes, and we are in the process of transitioning to a new statutory regime.  When the general election was called, industry experts raised concerned over delays to TPR’s new DB funding code. The DB funding regulations came into force on 6 April 2024 and will apply to scheme valuations from 22 September 2024, but a Code from TPR did not follow alongside it. The Code is an important piece of the DB funding jigsaw as it sets out how schemes are expected to comply with the requirements of the new regulations.

Prior to the election TPR said “during the pre-election period we will continue to regulate in line with our statutory objectives. Employers and trustees must continue to comply with their pension duties. We are working with government and other regulators on any implications for the timetable of our work”.

The Code needs to lay before Parliament for 40 days before coming into force.  With the parliamentary summer recess imminent, this means that it will not be possible for the Code to be in force before the September “go live” date for the new regime, but now that we are past the election might we see a proposed final version of the Code published by TPR (even if it’s not formally laid until September)?

Due to the uncertainty around when we will see the Code, the PLSA have called for the Labour Government to consider this urgently and as its first priority for the pensions sector. 

Reform regarding the return of surplus

Following the Conservatives’ Mansion House proposals, the rules around the use of surplus have been a hot topic for the pensions industry. The previous government had announced that they were looking into the rules to give powers to trustees to refund employers surplus as part of wider proposals to boost UK investment and growth.

Labour’s promised wholesale review of the pensions landscape looks to have a similar focus and Employers who have not done so already will no doubt want to understand their ability to access and use DB surplus. We anticipate this will be a developing area over the coming months.

Automatic enrolment and incentivising the workforce

Employers will also be keen to consider the impact of the new Government on pension saving as a whole.  The private members bill extending the scope of auto-enrolment requirements (passed by the previous government but not yet brought into force) may well be an early item on new Pensions Minister Emma Reynolds’ agenda but in the longer term might the  Labour Government also look to bring about further increased automatic enrolment obligations in the form of higher contribution rates, or bringing workers from the gig economy within the scope of AE obligations? And, with the general rise in increased funding positions, might there be more appetite to run schemes on and perhaps even to reopen Schemes to DB accrual? Strategy for existing DB Scheme will be a key focus area for Employers.

More corporate activity?

Will the green shoots of economic recovery lead to lower interest rates, more lending and more corporate transactions? If yes, then those looking to buy or sell businesses with DB schemes will want to be alive to the powers of TPR in the Pension Schemes Act 2021. Increased funding positions may change perception of risk (and may present opportunities for purchasers) but understanding the extent of pensions risk will be very important on transactions.

Of course, the above topics are not the only things that Employers will want to be thinking about. Other hot topics include the Trustees’ approach to the General Code, Data Protection, Cyber Security and Dashboards (to pick just a few).

If you are a DB Employer (or work with one) and would like to discuss anything mentioned in this blog please contact Partner Chris Brown (chris.brown@burges-salmon.com) or your usual contact from the Burges Salmon Pensions & Lifetime Savings Team.

This blog was written by Legal Apprentice, Beatrice Breaden and Partner, Chris Brown, both in the Pensions & Lifetime Savings Team.