Developments in Employee Benefits law and practice

07 January 2019

Employers not expecting surge in opt-outs come April 2019

According to a new survey by the Association of Consulting Actuaries (ACA), three quarters of employers expect opt-out rates to remain low when the minimum contributions for automatic enrolment increase in April 2019.

Also, the majority of participating employers said that they would support a small increase in auto-enrolment contributions even after the planned rise in April. The median acceptable level of contributions supported by employers was 4% of earnings from both employer and employee alike, though employers with 500 or more employees supported a 5% contribution rate from both employer and employee.

DB deficits fall in 2018

Latest research by JLT Employee Benefits reveals that the combined deficit of the UK’s private sector defined benefit (DB) pension schemes fell by £12 billion over 2018. Over the year, combined assets fell by £53 billion. However, a £65 billion fall in deficits saw an overall reduction in scheme liabilities. The funding level of DB schemes remained the same in December 2018 as at 31 December 2017 at 93%.

PPF further update on Hampshire ruling

The Pension Protection Fund has published a further update about its approach to implementing the ECJ decision in Grenville Hampshire v The Board of the Pension Protection Fund.

This confirms that the PPF is first assessing the position of members subject to the long-service cap, after which it will deal with members subject to the standard compensation cap. Once these two categories have been addressed, the position of all remaining members will be considered, including those yet to start drawing benefits.

According to the PPF, the process is complicated by the fact it does not hold full service records for members to whom it is paying compensation.

Member awarded £18k for transfer delay

In this Deputy Pensions Ombudsman determination (Mr L, PO-19153), the trustees of the Standard Life pension scheme were directed to pay £18,000 investment losses that were caused by a transfer delay

Mr L wanted to transfer his Standard Life benefits (DB and DC) in order to consolidate all his benefits into one plan. 

The transfer should have been made by April 2017, but was not completed until August 2017. 

The Ombudsman found that, if the transfer had been made in April 2017, as it should have been, it would have been invested the next day. The Ombudsman was able to ascertain the number of units that had not been purchased by reason of the delay, which amounted to a loss of £18,156.04.

The Deputy Ombudsman also pointed out that Mr L had a right to transfer his DB and DC benefits separately. However, the trustees had provided incorrect information to Mr L about such rights. This amounted to maladministration, for which the trustees offered £1,500.

The trustees were directed to pay £18,156.04, which reflected the loss suffered plus the £1,500 offered by the trustees.

This determination is a reminder of the importance of members statutory transfer rights and prescriptive timescales that apply to them.

Single Financial Guidance Body website launched

The Single Financial Guidance Body (SFGB) creates one organisation from the three existing providers of government-sponsored financial guidance: 

  • The Money Advice Service
  • The Pensions Advisory Service
  • Pension Wise

bringing together for the first time the provision of debt advice, money guidance and pensions guidance.

The SFGB is funded by levies on both the financial services industry and pension schemes. The new body is sponsored by the Department for Work and Pensions, but will also engage with HM Treasury, which is responsible for policy on financial capability and debt advice.

According to Sir Hector Sants, SFGB Chairman - “The new organisation has a clear mission to help everyone manage their personal finances as well as their circumstances allow across the nation. We are creating an organisation which is seen as transparent, accountable, effective and above all respected by all, working hand-in-hand with the industry, our staff and our partners.”

The name for the SFGB has yet to be decided.


John W. Wilson LLB(Hons) FPMI ACII, Head of Research| Email: