Developments in Employee Benefits law and practice

04 November 2019

HMRC Newsletter provides update on GMP equalisation

Contents of HMRC newsletter 114 are:

  1. Registration statistics 
  2. Pension flexibility statistics 
  3. Pension scheme administration - moving pension recipients from one payroll to another 
  4. Relief at source 
  5. Guaranteed Minimum Pension (GMP) Equalisation 
  6. Annual allowance - GOV.UK guidance on ‘scheme pays’

On GMP equalisation, the newsletter confirms that guidance will be published in December.

TPR powers and DB funding briefings

The House of Commons Library has updated briefing paper SN04368: TPR’s powers to protect pension scheme benefits and proposals to strengthen them in the Pension Schemes Bill 2019/20.

Briefing paper SN04877: current funding regime for DB pension schemes has been updated too.

Simple annual benefit statements consultation 

The DWP has published a consultation seeking views on the Government’s approach to achieving simpler annual statements for workplace pensions. The consultation also seeks opinions on the relationship of simpler statements with innovative communication tools, including pension dashboards, and how to encourage savers to open their statements.

OPS Revaluation Order 2019

This Statutory Instrument sets out the minimum required level of revaluation for pension rights (excluding Guaranteed Minimum Pensions) of early leavers from final salary occupational pension schemes, on or after 1 January 1986, where the accrued rights have been left in the scheme.

OECD Pensions Markets in Focus 2019

The Organisation for Economic Co-operation and Development (OECD) has published the 2019 issue of its Pension Markets in Focus report. The report found that pension assets accumulated through pension funds, pension insurance contracts and other retirement savings products amounted to $44.1trn at the end of 2018, down from $45.6trn in 2017. However, over the last decade, pension assets have increased in nominal terms in almost all reporting countries.

IFoA: Savings Goals for Retirement

This report uses actuarial analysis to give savers an idea of how much they might need to save in order to reach a certain lifestyle in retirement.

The analysis based on the Pensions and Lifetime Savings Association’s Retirement Living Standards shows: 

  • People saving at the minimum level mandated by automatic enrolment, and with a full National Insurance record, should be on track to achieve the ‘minimum’ retirement living standard.
  • Someone on average full time earnings will need to save around a quarter of their income (26%) to be on track to achieve the ‘moderate’ retirement living standard.
  • Someone aiming to achieve the ‘comfortable’ retirement living standard will need to save more than double what they’d need to save if aiming for ‘moderate.

On a related note, the Institute for Fiscal Studies (IFS) has published a working paper entitled Should generations differ in their wealth accumulation? Using generation-specific inputs to its model, the IFS examines the impact of differences in earnings, household composition, life expectancy, retirement ages, the tax and benefit system, the state pension system and rates of return on assets. According to the research, later born generations will require higher saving rates even to achieve lower replacement rates in retirement than their predecessors.

Brexit update

  • The European Union has agreed to give the U.K. a three-month flexible extension to its date for leaving the EU.
  • The Treasury has confirmed that the Budget which had been set for 6 November will not go ahead. 
  • The Government confirmed that it would not bring back its Withdrawal Agreement Bill and instead successfully tabled the Early Parliamentary General Election Bill 2019-20 calling for a General Election on 12 December. 
  • The last sitting day for Parliament is 5 November.
Contact:

Julian Rowe | Policy, Professionalism & Research | email: Julian.Rowe@MERCER.com