The Occupational Pension Schemes (Administration, Investment, Charges and Governance) and Pensions Dashboards (Amendment) Regulations 2023

The Occupational Pension Schemes (Administration, Investment, Charges and Governance) and Pensions Dashboards (Amendment) Regulations 2023 (SI 2023/399) were published on legislation.gov.uk, the official platform of the UK government for publicizing legal documents. The regulations modify the above noted regulations largely to
(1) require the disclosure of policies as regards investments in illiquid assets by defined contribution occupational pension schemes, including information on
– the types of illiquid assets;
– whether or not the positions involve direct or indirect investments in illiquid assets (e.g. via collective investment schemes);
– a fund manager’s reasoning as to the holding of illiquid assets (e.g. description of benefits to investors).
(2) exempt certain performance-based fees from the regulatory charge cap calculation namely those that are – as quoted:
– payable by or on behalf of the trustees or managers of a pension scheme to a fund manager in relation to investments (“the managed investments”) managed by the fund manager, either directly or as part of a collective investment scheme, for the purposes of the scheme;
– calculated only by reference to investment performance, whether in terms of the capital appreciation of the managed investments, the income produced by the managed investments or otherwise;
– only payable when—
– investment performance exceeds a pre-agreed rate, which may be fixed or variable; or
– the value of the managed investments exceeds a pre-agreed amount;
– calculated over a pre-agreed period of time; and
– subject to pre-agreed terms designed to mitigate the effects of short-term fluctuations in the investment performance or value of the managed investments“.
To recall, a charge cap of 0.75% applies to all default pension schemes arrangements, limiting the administration fees (excluding transaction costs) that may be charged upon scheme members.
(3) correct an error in the Pensions Dashboards Regulations 2022 as regards the staging profile of pension schemes (when do their systems need to be ready for the new dashboards). Specifically, in schedule 2, part 1, third column under „number of employees“, whereever it reads “10,999” this number should be replaced with “10,000”.
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The regulations have varying effective dates as outlined in the above noted timeline.