The Pensions Brief: February 2024

• Published date: 19 March 2024
• Law Firm: Mayer Brown
• Author: Mr Andrew Block and Katherine Carter

Issues affecting all schemes

Lifetime allowance abolition - legislation and guidance

The Finance Act 2024, which provides for the abolition of the lifetime allowance (LTA) and introduction of the new tax regime for lump sums and lump sum death benefits from 6 April 2024, has received Royal Assent. HMRC has confirmed that a number of changes will need to be made to the Act to ensure that its provisions correctly reflect the intended policy. These changes will be made by regulations which have yet to be published.

HMRC has also published two further LTA guidance newsletters (February and March). These include FAQs and further guidance on a range of topics including:

• Pension commencement excess lump sums (PCELS) - in particular, the cap on the amount of a PCELS will be removed.
• Transitional tax-free amount certificates.
• Reporting obligations.
• LTA protections and enhancement factors.

Action

Trustees, employers and administrators should continue their preparations for abolition of the LTA and introduction of the new lump sum regime. They should also monitor publication of the HMRC regulations (and announcement of any further changes to the legislation), as well as publication of further HMRC guidance.

Cyber security - Pensions Regulator report

The Pensions Regulator (TPR) has published a report on the actions it took following the cyber breach experienced by Capita in early 2023. The report also sets out the steps that TPR expects trustees to take in the event of a cyber incident and emphasises the importance of schemes having robust cyber security and business continuity plans in place. For more information, please see our legal update.

Action

Trustees and administrators should review the report and consider whether any changes are required to their scheme's cyber security arrangements.

Automatic enrolment - earnings figures and alternative quality requirements

The government has announced that the 2023/24 automatic enrolment earnings figures will be retained for 2024/25, meaning they will be:

• Earnings trigger: '10,000.
• Qualifying earnings band: '6,240 - '50,270.

The government has also published the findings of its 2023 review of the automatic enrolment alternative quality requirements. This includes a response to its May 2023 call for evidence on the operation of the alternative quality requirements for DB and hybrid schemes. Following the review, the government has concluded that no changes are needed to the requirements.

Action

Employers should ensure...