Developments in Employee Benefits law and practice

16 December 2018

Nearly 10m auto-enrolled

The number of people who have been automatically enrolled into workplace pension schemes has increased to 9.96 million over November, according to The Pension Regulator’s latest research.

10 million auto-enrolled

TPR launches first fraud prosecution 

An accountant is to appear in court charged with fraud and making employer-related investments, the first time The Pensions Regulator (TPR) has prosecuted for these offences.

Roger Bessent is accused of abusing his position as the director of Gleeson Bessent Trustees Ltd, a professional pension scheme trustee, to transfer more than £200,000 of pension scheme funds into his bank account and those of companies controlled by him. The funds were transferred from the Focusplay Retirement Benefit Scheme, the sponsoring employer of which was Gleeson Bessent (Accountants and Business Advisers) Ltd where Mr Bessent was a director.

Mr Bessent, 66, whose business is based at Navigation Business Village, Navigation Way, Ashton on Ribble, Preston, Lancashire, faces five counts of fraud by abuse of position and five counts of making employer related investments.

He has been summonsed to appear at Preston Magistrates’ Court on 30 January 2019. Fraud by abuse of position is an offence under Section 1(2)(c) of the Fraud Act 2006. It carries a maximum sentence of 10 years’ imprisonment. Making a prohibited employer-related investment is an offence under Section 40(5) of the Pensions Act 1995. It carries a maximum sentence of two years’ imprisonment.

CMA final report

The Competitions and Market Authority (CMA) has released its final report on its Investment Consultants Market Investigation.  The report has made few changes to the Provisional report issued in October. They have proposed a number of remedies.

  • The introduction of mandatory tendering when pension trustees first purchase fiduciary management services and a requirement to run a competitive tender within five years if a fiduciary management mandate was awarded without one. 
  • A requirement on investment consultants to separate marketing of their fiduciary management service from their investment advice and to inform customers of their duty to tender in most cases before buying fiduciary management. 
  • The Pensions Regulator to give greater support for pension trustees when running tenders for investment consultancy and fiduciary management services and guidance for pension trustees to support our other remedies. 
  • Requirements on fiduciary management firms to provide better and more comparable information on fees and performance for prospective customers and on fees for existing customers. 
  • A requirement for pension trustees to set objectives for their investment consultant, in order to assess the quality of investment advice they receive. 
  • A requirement on investment consultancy and fiduciary management providers to report performance of any recommended asset management products or funds using basic minimum standards.

The CMA is also making recommendations to government to enable The Pensions Regulator to oversee their remedies on pension scheme trustees and to extend the Financial Conduct Authority’s regulatory perimeter to include all of the main activities of investment consultants.

A JLT Alert on the report is available.

HMRC Manage and Register Pension Schemes service newsletter 

Contents include:

  • Additional feature from 11 December 2018
  • Features added on 13 November 2018
  • Features we’ll add in March 2019
  • Reporting for schemes registered on the Manage and Register Pension Schemes service
  • User research
  • Registering as a scheme administrator for pension schemes registered before 4 June 2018

Final PPF Levy Rules for 2019/20

The PPF have published their final levy rules for 2019/20.

The total levy we expect to collect is confirmed at £500 million, down from the £550 million estimate for 2018/19.

A JLT Alert is available.

Scottish Budget 

Starter and basic rate bands in Scotland have been increased by inflation, effectively maintaining the current rates of income tax for the coming year for the majority of taxpayers. However, the higher rate threshold, which is paid by the top 15% of taxpayers in Scotland, will be frozen at £43,430 for the new tax year starting in April 2019, compared with the higher threshold of £50,000 from the 2019/20 tax year in the rest of the UK.

Proposed income tax rates and bands for 2019-20

Income in range Name  Rate 
Above £12,500* – £14,549 Starter rate  19% 
Above £14,549 - £24,944 Scottish basic rate  20% 
Above £24,944 - £43,430 Intermediate rate  21% 
Above £43,430 - £150,000** Higher rate  41% 
Above £150,000** + Top rate  46% 

*Assumes individuals are in receipt of the standard UK personal allowance of £12,500. **Those earning more than £100,000 will see their personal allowance reduced by £1 for every £2 earned over £100,000.

FCA: DP 18/10 – Patient capital and authorised funds 

FCA's paper seeks views on whether its regime provides investors and fund managers with appropriate access to patient capital investment while maintaining the right level of consumer protection. Responses are required by 28 February 2019.

Financial Guidance and Claims Act 2018 (Commencement No 5) Regulations 2018

Under this statutory instrument, SI 2018/1330, certain provisions of the Financial Guidance and Claims Act 2018 will come into force in the UK on 1 January 2019. The commenced provisions relate to pensions guidance, debt advice and money guidance.

TPR warns schemes to check whether they are master trusts

The Pensions Regulator (TPR) is warning pension scheme trustees to check if they fall under master trust legislation. TPR has launched a step-by-step guide for schemes to check if they are a master trust as some may not know they fall within the definition.

Master trusts have until 31 March to either apply for authorisation or trigger their exit from the market. After that date, master trusts which fail to either apply or trigger their exit will be breaking the law.

Schemes should use TPR’s step-by-step guide to help them decide what action to take, including seeking further advice.

Any defined contribution scheme providing pensions for multiple and unconnected employers may be a master trust, and trustees should seek legal advice if they think their scheme falls under the definition.

Ninety master trusts have been identified in the market. One has submitted its application, three have exited and 32 have triggered their exit, leaving 54 which either need to apply or trigger their exit in the next four months.

OECD Pensions Outlook 2018

The OECD’s Pensions Outlook 2018 has suggested that, over the last 10 years, pension schemes have become more financially sustainable and that governments should now focus on ensuring that such schemes provide members with an adequate retirement income.

Proposals from the OECD include the introduction of default options, automatic features, and simplified information and choices. 

 

Contact:

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