HMRC AA charges 2014/15 Reminder | TPR Auto-enrolment Tool

16 August 2015

Week ending 16 August: HMRC remind about AA charges for 2014/15 | TPR automatic enrolment tool & other stories

HMRC remind about AA charges for 2014/15

From 6 April 2014 the annual allowance for tax relief on pension savings in a registered pension scheme was reduced to £40,000. Administrators will soon be issuing annual allowance pension statements for the 2014 to 2015 tax year to all scheme members contributing more than £40,000. The issue of these statements is a legislative requirement of Finance Act 2011.

An annual allowance charge will be due where a member exceeds the annual allowance and does not have sufficient unused annual allowance to carry forward from previous tax years. Further information on carry forward can be found here.

HMRC is asking administrators to remind members that it is really important that those who have exceeded the annual allowance for 2014 to 2015 across all of their pension schemes declare this on their Self Assessment Tax Return (the deadline for submitting this is 31 January 2016). They’ll also have to pay a tax charge. Further information on paying tax charges can be found here.

Members can use online tools and calculators to help check whether they need to declare and pay an annual allowance tax charge, even if they haven't received a pension statement.

TPR automatic enrolment tool

The Pensions Regulator consulted earlier this year on proposals to develop a basic automatic enrolment tool to support users of HM Revenue and Customs' Basic PAYE Tools (BPT), and has now issued its response to the feedback it received. The majority of consultation responses were supportive of the regulator’s proposals, and a basic automatic enrolment tool should be available to download from the regulator’s website by the end of 2015.

To ensure the basic tool will not have a negative impact on the existing payroll and pension market, its functionality will be limited. It aims to mitigate the compliance risks associated with the ongoing monitoring of workforce eligibility (workforce assessment) and correct calculation of contributions. The regulator will keep its need under review.

New Regulator guidance Employer Covenant

The Pensions Regulator has published the first in a series of guides for trustees of defined benefit (DB) occupational pension schemes to help them apply the DB funding code of practice. The publication provides good practice guidance on how to assess and monitor an employer’s covenant, the employer’s legal obligation and financial ability to support their scheme.

The regulator says it has taken a practical approach, breaking the guidance down into a series of user-friendly examples, checklists and scenarios - available alongside the full, detailed guidance document.

The regulator says these documents can be used by trustees as a handbook to guide them step by step through assessing their employer covenant. Although primarily aimed at scheme trustees, it will also be of interest to the sponsoring employers and their advisers. The guidance will help trustees decide:

  • who should assess the covenant;
  • what a proportionate approach should look like;
  • how the covenant should be assessed in the context of the scheme;
  • how to monitor the covenant on an ongoing basis and prepare contingency plans to react appropriately;
  • what to consider to improve the security of the scheme.

The guidance also outlines specific considerations for schemes in the not-for-profit sector and non-associated multi-employer schemes. It replaces the regulator’s previous monitoring employer support (covenant) guidance, published in 2010.

Later this year, the regulator intends to produce further guidance to help trustees navigate the DB code, including guides on integrated risk management and investment strategy.

NEST survey reveals that Employers want flexible outsourcing of auto enrolment

Research by the National Employment Savings Trust (NEST) shows that almost two thirds of small and micro employers say it is important to have a pension scheme that enables them to outsource automatic enrolment processes easily. They are also looking for clear communications and straightforward processing from pension providers.

Other factors that small and micro employers value highly in a pension scheme include:

  • clear communications, with 79 per cent of employers saying it’s important; and
  • a straightforward online process to set-up and manage the scheme, with 77 per cent saying it’s important.

The research also found that only 10 per cent of small and micro employers don’t know anything auto enrolment, suggesting that employers know auto enrolment is coming, even though many won’t begin staging for another 12 to 18 months.

However, 87 per cent of small and micro employers have not chosen their pension provider and 48 per cent are not certain of their staging date.

PPF appeal on parent company guarantee rejected

The PPF Ombudsman has upheld an earlier Pension Protection Fund decision to reject a parent company guarantee as contingent asset in respect of the PPF levy

The PPF said the guarantee did not meet the requirements about ‘guarantor strength’ (under which the PPF can accept a guarantee as a contingent asset if satisfied the guarantee reduced the risk of compensation being payable from the PPF in the event of employer insolvency and that the resulting reduction in the scheme’s levy was reasonably consistent with the level of reduction in risk). The PPF's concern was that the guarantor's net asset value related predominantly to its investment in the employer. So, if the employer became insolvent, the guarantor was unlikely to have sufficient non-employer-related assets to meet its obligations under the guarantee.

On appeal, the Ombudsman held that the PPF’s decision to reject the guarantee was reached correctly. He found that at all stages the PPF gave full reasons for its decision, which were not beyond the bounds of reasonableness.

The determination is another example of how difficult it is to successfully appeal PPF decisions where the PPF has followed its levy determinations.

Teachers’ Pensions alerts members to possibility of transferring their pensions overseas

Teachers’ Pensions are writing to members saying it has come to light that the legislative changes introduced from 6 April 2015, restricting transfers from unfunded Public Service Pension Schemes to schemes offering flexible access to pension benefits, do not extend to those qualifying recognised overseas pension schemes (QROPS) which are not occupational pension schemes and which have their main administration in a state in the European Economic Area, other than the UK.

The letter will include new discharge forms and will ask members to complete and return the discharge paperwork if they still wish to proceed with the transfer. However, members, and their advisors, must note that the scheme receiving the transfer must be on the revised QROPS list, updated by HMRC on 1 July 2015, have their main administration in a state in the European Economic Area, other than the UK, and must not be an occupational pension scheme.

Teachers’ Pensions say they are aware that HM Treasury is planning further legislation to cover the schemes described above within the restrictions on transfers from unfunded Public Service Pension Schemes. Consequently members need to be aware that in order for Teachers’ Pensions to make a transfer payment they must submit the completed discharge paperwork before any such legislation comes into effect.


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

Julian Rowe, Head of Technical | Email: