Developments in Employee Benefits law and practice

09 July 2018

PSN 100

  • HMRC have published Pension Schemes Newsletter 100. This edition includes:
  • Manage and Register Pension Schemes service – launched 4 June 2018 and updated 11 June 2018 – feedback requested
  • Registering as a scheme administrator and applying to register a pension scheme – reminder on procedure
  • Transfers between registered pension schemes – reminder about requests for confirming status process
  • Annual allowance calculator – aiming to be fixed by 6 July 2018 (see below)
  • Relief at source: deadline for 2017-18 annual return of information – 5 July 2018; amendments to relief at source forms and templates; government Gateway credentials required to access the look up residency status for relief at source service – link to further information; further devolution – changes from 6 April 2019 on devolution of income tax rates paid by Welsh taxpayers; annual return of information for 2018 to 2019 onwards – forthcoming changes
  • Recognised overseas pension schemes (ROPS) notifications list – changes to format of list
  • Taxation of flexi access payments – update on revisions to employer guidance
  • Reporting multiple small pots payments – reporting problems and fixes in progress.

https://www.gov.uk/government/publications/pension-schemes-newsletter-100-june-2018/pension-schemes-newsletter-100-june-2018

HMRC's Annual Allowance Charge Calculator is back again this afternoon at

https://www.tax.service.gov.uk/pension-annual-allowance-calculator.

Master Trusts Code of Practice

The Pensions Regulator (TPR) has published a draft code of practice 15, which sets out how an application for the authorisation of master trusts is made and what TPR takes into account when considering applications.

The code applies to those involved in the operation of a master trust, for example trustees, scheme strategists, scheme funders and their advisers.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/721760/authorisation-and-supervision-of-master-trusts-draft-code-of-practice-15.pdf

PPF Compensation Regulations

A consultation on changes to the Pension Protection Fund (PPF) compensation rules, to ensure that the PPF have the legal basis to administer the compensation regime as intended, has been published by the Department for Work and Pensions.

A recent High Court judgment (Beaton v Board of the Pension Protection Fund) has resulted in the legislation being interpreted in a way that does not reflect PPF practice or the policy intent in cases where a person has benefits derived from a fixed pension.

The consultation concerns proposed changes to PPF compensation rules - the Pension Protection Fund (Compensation) Regulations 2005, SI 2005/670 - to remedy the immediate problems caused by the judgment and ensure that the PPF have the legal basis to administer the compensation regime as intended.

The proposed Pension Protection Fund (Compensation) (Amendment) (No.2) Regulations 2018 seek to clarify that a relevant fixed pension is regarded as attributable pensionable service for the purpose of calculating PPF compensation, including the application of the PPF compensation cap where relevant.

The government is also proposing in these regulations to take the opportunity to bring the definition of “pensionable service” in the Pension Protection Fund (Compensation) Regulations 2005 in line with the definition in paragraph 36 of Schedule 7 to the Pensions Act 2004, as modified by the proposed regulations.

https://www.gov.uk/government/consultations/changes-to-the-pension-protection-fund-ppf-compensation-regulations/changes-to-pension-protection-fund-ppf-compensation-regulations-public-consultation

C-Out Countdown Bulletin 35

Countdown bulletin 35 has updates on:

  • scheme cessation guidance for Pension Scheme Administrators
  • new automated solution for 2R local authority schemes liability part period
  • new automated solution for change of responsible paying authority
  • Guaranteed Minimum Pension checker

https://www.gov.uk/government/publications/countdown-bulletin-35-june-2018/countdown-bulletin-35-june-2018

PLSA publishes final ‘Hitting the Target’ paper

The PLSA is setting out the recommendations of its ‘Hitting the Target’ consultation to help more people achieve the income they want in retirement

New research from the Pensions and Lifetime Savings Association (PLSA) reveals eight in ten (80%) aren’t confident they’re saving enough for retirement, equating to 30.4 million working age people who risk not being able to afford the lifestyle they want in later life.

The findings are part of the PLSA’s new report - Hitting the Target: A Vision for Retirement Income Adequacy – which sets out the conclusions of a three month consultation designed to help everyone achieve a better income in retirement. Auto-enrolment has been a huge success in getting millions more saving into a pension, but people simply aren’t saving enough.

While a third (34%) say they could save more for retirement, it’s possible that uncertainty about how much income they’ll need is preventing people from doing so. The Government’s minimum auto-enrolment pension contribution level is currently 5%, increasing to 8% next year, and half (51%) wrongly believe this is the ‘recommended amount’ to save. More than four in ten (44%) assume the level has been set to ensure everyone will be comfortable in retirement when in fact it is only to ensure as many as possible have the minimum they need to live off.

With such widespread confusion among savers about the right amount to save and whether they’re on track, it’s clear more needs to be done to help people achieve the standard of living they want in later life. This includes finding ways to increase contributions as well as helping savers better understand pensions and plan for the future.

At present, half (51%) say they don’t have enough time to plan for the future, but 74% think retirement planning would be much easier if the UK had Retirement Income Targets (RITs), like the system currently used in Australia. Seven in ten (70%) even say RITs would encourage them to save more, increasing to eight in ten (78%) millennials (18-34 year olds).

The PLSA is making a number of recommendations for change and these include:

  1. Introducing targets and increasing engagement: A package of measures is needed to improve savers’ engagement in pensions, including producing retirement income targets that show the lifestyle someone could afford on different levels of income. The PLSA has commissioned independent researchers to develop these and will work with Government and industry on how these can be rolled out.
  2. Increasing pension savings: The Government should raise the minimum contribution levels for automatic enrolment from 8% of band earnings to 12% of total salary between 2025 and 2030, with at least 50% of this coming from employers to ensure it is affordable for savers.
  3. Increasing support at retirement: Pension schemes should signpost people to appropriate product options at retirement to ensure those who have difficulty making active decisions are still able to access a suitable, good value product.
  4. Making it easier to use other income sources: It should be easier for people to supplement their retirement with income from borrowing against their home, and to keep working in later life, if they wish. The Single Financial Guidance Body’s guidance sessions should therefore both cover property assets and how a salary can supplement someone’s pension income.
  5. Improving how pension schemes are run: The pensions sector should develop a set of metrics to assess whether a scheme offers good value for money, and all schemes and providers should be well governed and have a remit to support savers into retirement.

https://www.plsa.co.uk/Policy-and-Research-Defined-Contribution-Hitting-the-target-project

FB 2018/19 clauses

The government has issued draft Finance Bill 2018-19 legislation, which includes the reform of employer contributions into life assurance and overseas pension schemes (this measure widens the definition of beneficiary for qualifying relevant overseas pension schemes).

https://www.gov.uk/government/collections/finance-bill-2018-19

Contact:

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

Stephen Williams, Senior Research Consultant | Email: stephen_williams@jltgroup.com