Developments in Employee Benefits law and practice

12 March 2018

Weekly update on new developments in the pension industry for week commencing 11 March 2018

Latest contracting-out countdown bulletin

Bulletin 32 has been issued and covers the following topics –

  • Termination and transfer notices
  • Contributions Equivalent Premium (CEP) or Limited Revaluation Premium (LRP) refunds due to post 5 April 2016 Transfers
  • Matched members not showing on SRS refreshed output
  • Secondary type 5 queries
  • Data limit for query templates sent for an automated solution

Financial guidance and claims bill update

The Government has tabled amendments to the Bill. These take forward key recommendations of the Work and Pensions Committee aimed at protecting pensioners against scams and boosting take-up of free independent pensions guidance.

Pensions cold calling ban

The Government's New Clause 3 makes provision for a ban on pensions cold calling to be put in place by June. The proposal aligns with the Committee’s recommended amendment on pension cold calls in its Protecting Pensions Against Scams report.

Pensions guidance

The Government has also tabled amendments to clause 19 of the Bill on the provision of pension guidance:

Amendment 13 requires pension schemes to ensure that an individual seeking to access pension savings is "referred to appropriate pensions guidance” and “has either received appropriate pensions guidance or has opted out of receiving such guidance". This echoes the Committee's recommendation that individuals, subject to appropriate exceptions, be required to receive or expressly refuse independent guidance before being granted access to their pension pot.

Amendments 13 and 14 remove the reference to independent financial advice, in order to ensure that clients are to be directed towards the independent guidance service. The explanatory statement to these amendments indicates the Government’s intention that this guidance will be provided by the new Single Financial Guidance Body.

Amendment 15 makes clear that the FCA's rules should make provision about how individuals are to indicate that they have received guidance or expressly opted out.

Total UK pension liabilities increase to £7.6trillion

According to latest data from the Office for National Statistics, total UK pension liabilities (private and State pensions) rose to approximately £7.6trn between 2010 and 2015.

This represents an increase from £6.6trn at the end of 2010.

HMRC Newsletter 96 and 'TAA' guidance

HMRC have published Pension schemes newsletter 96 - February 2018 containing the following updates and guidance -

(1) Scottish Budget 2017 – taxation of pension income:
a. Fixed rate charges;
b. Marginal rate charges;
c. Pension flexibility payments and PAYE;
d. Lump sum death benefits

(2) Relief at source - annual return of individual information for 2017-18 onwards:
a. How to submit an annual return of individual information;
b. Structured format

(3) Look up residency status for relief at source:
a. Access to check residency status on GOV.UK;
b. Accessibility and assisted digital user research

(4) Relief at source – excess relief

(5) New pensions online service:
a. Updating scheme administrator details;
b. New pensions online service newsletter

(6) Reporting of non-taxable death benefits.

View Pension schemes newsletter 96 - February 2018

By way of a reminder, the Scottish Parliament has set the following income tax rates and bands for 2018/19:

Over £11,850-£13,850 Starter Rate  19%
Over £13,850 - £24,000 Basic Rate  20%
 Over £24,000 - £43,430 Intermediate Rate  21%
 Over £43,430 - £150,000 Higher rate 41%
 Above £150,000 Top Rate  46%

HMRC has also published ‘Pension schemes - work out your reduced (tapered) annual allowance updated’

The updated guidance on working out the pension schemes annual allowance now has instructions for defined benefit pension schemes, like career average schemes.

View the updated guide at Pension schemes: work out your reduced (tapered) annual allowance

ICO Guide on Data Protection Bill

The Information Commissioners Office (ICO) has published this guide for stakeholders, noting that it intends to produce detailed guidance once the Bill has been enacted.

Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2018

Under the Statutory Instrument, SSI 2018/337, amendments are made increasing certain social security contributions, rates, limits and thresholds and national insurance funds payments in the UK. The Regulations will come into force on 6 April 2018 (Updated from draft on 9 March 2018).

The Social Security Contributions and Benefits Act 1992 and corresponding provisions in the Social Security Contributions and Benefits (Northern Ireland) Act 1992, and the Social Security (Contributions) Regulations 2001, SI 2001/1004, are amended to increase amongst others:

  • the rate at which class 2 national insurance contributions (NICs) are payable by self-employed earners from £2.85 to £2.95 per week
  • the small profits threshold which is the minimum amount of profits chargeable to income tax that a self-employed earner must generate to incur liability to class 2 NICs, from £6,025 to £6,205 per year
  • the amount of a voluntary Class 3 NICs from £14.25 to £14.65
  • the lower and upper profits limits for Class 4 NICs between which Class 4 NICs are payable by the self-employed at the main Class 4 percentage rate. The lower limit increases from £8,164 to £8,424 per year and the upper limit from £45,000 to £46,350 per year
  • a number of weekly earnings limits and thresholds for determining liability to Class 1 NICs and entitlement to associated state benefits specified including the lower earnings limit, upper earning limits, primary threshold, secondary threshold, upper secondary threshold for the under 21 age group and for relevant apprentices
  • the prescribed equivalents of the upper earnings limit, the primary threshold, the secondary threshold, and the upper secondary thresholds for the under 21 age group and relevant apprentices specified for monthly and yearly earnings periods.

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