Developments in Employee Benefits law and practice

20 August 2018

TPR and FCA targeting scammers in new campaign

The Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) have joined forces to launch a campaign urging people to be aware of scammers targeting their pension savings, as it was revealed an average of £91,000 was lost per victim in 2017. The ‘ScamSmart’ advertising campaign targets savers aged between 45 and 65, which the regulators say is the most at risk group.

http://www.thepensionsregulator.gov.uk/press/regulators-warn-public-of-pension-scammer-tactics-as-victims-report-losing-average-of-91000-in-2017.aspx

PPF consults on changes to S143 and S179 assumptions

The Pension Protection Fund (PPF) has published a consultation document proposing changes to the actuarial assumptions used in s179 and s143 valuations.

By law, the PPF has to set its valuation assumptions to reflect pricing in the bulk annuity market.

  • Section 143 valuations are used to determine whether a scheme should enter the PPF following an insolvency event.
  • Section 179 valuations are used to calculate scheme underfunding to determine the risk-based pension protection levy that a scheme should pay.

The most significant proposed changes are:

  • to move to the CMI_2016 model for mortality improvements, and
  • to use slightly higher discount rates for certain tranches of benefit so that they can better reflect current pricing.

There would also be consequential changes to valuations carried out under sections rel="noopener noreferrer" 152, 156 and 158.

https://www.pensionprotectionfund.org.uk/DocumentLibrary/Documents/S143%20condoc%20Aug%202018.pdf

Countdown Bulletin 36

Contracting-Out Countdown Bulletin 36 has been published on the Gov.UK website.

Countdown bulletin 36 has updates on:

  • Phase 7 automation
  • Scheme Reconciliation Service data re-runs and queries
  • Not in scheme Contributions Equivalent Premium
  • The new automated solution for change rel="noopener noreferrer" of responsible paying authority

https://www.gov.uk/government/publications/countdown-bulletin-36-august-2018

Commission not an unauthorised payment

In this case, Andrew Monaghan v HMRC –

  • in 2014, the taxpayer received a commission fee from an introducer when he transferred his pension fund to a new pensions company;
  • in 2017, HMRC raised a Discovery Assessment  on the basis that the receipt constituted an unauthorised payment from a pension fund and a Pensions Unauthorised Payment Charge applied; and
  • the taxpayer appealed to the tribunal.

The First-tier Tribunal (FTT) held that, whilst the taxpayer had received a commission payment, it was not an unauthorised payment because it was impossible to discern its source and there was no evidence of any link between the rel="noopener noreferrer" payer and companies in which Mr Monaghan’s funds were invested.

http://financeandtax.decisions.tribunals.gov.uk//judgmentfiles/j10372/TC06408.pdf

Financial Guidance and Claims Bill 2017-19

An updated version of this House of Commons library briefing covers rel="noopener noreferrer" the July 2018 consultation on pensions cold calling and legislative plans for the autumn.

http://researchbriefings.files.parliament.uk/documents/CBP-8033/CBP-8033.docx

TPR using powers more

Fraudsters, poorly performing trustees and rogue employers are being tackled through the use of a wider range of powers by The Pensions Regulator (TPR).

TPR’s latest quarterly compliance and enforcement bulletin highlights how TPR is using its powers more to give better protection to pension holders.

Between April and June this year, a number of different powers have been used for the first time by case teams dealing with pension scams, scheme valuations and automatic enrolment.

Production orders, which require institutions to hand over evidentially admissible financial information on individuals or organisations under the Proceeds of Crime Act 2002, were used successfully as part of an investigation into pension fraud.

This was the first time that TPR secured these orders that required a bank to hand over statements and other details of the accounts linked to the trustees of a pension scheme, which were needed for the ongoing criminal investigation.

Secondly, TPR fined a trustee that failed to complete a valuation on its DB pension scheme, using our power under section 10 of the Pensions Act 1995.

The trustee was ordered to pay a £25,000 fine after it twice failed to have the required scheme valuation completed, as is required every three years.

Thirdly, TPR prosecuted a recruitment company, its directors and a number of its senior staff after they worked together to illegally opt out workers who had been automatically enrolled into a workplace pension scheme.

This was the first time rel="noopener noreferrer" TPR prosecuted offences under the Computer Misuse Act 1990. Each of the defendants has pleaded guilty to the charges.

http://www.thepensionsregulator.gov.uk/docs/compliance-and-enforcement-quarterly-bulletin-april-to-june-2018.pdf

Separately, the accountant of a London cafe has admitted falsely claiming to The Pensions Regulator (TPR) that staff had been enrolled into pensions.

TPR launched an investigation into Gran Caffe Londra in Knightsbridge, run by Primadell Ltd, after the company missed its deadline to automatically enrol staff into a pension in October 2015.

When TPR arranged an inspection of the business, accountant Hashmukh Shah, 63, falsely declared that the company had met its duties.

When later interviewed by TPR, Shah, of Richmond, Surrey, admitted purposely misleading the regulator. This prevented an inspection of the business which would have uncovered the employer’s failure to automatically enrol its staff.

Shah’s false declaration paused TPR’s investigations for more than a year, during which time staff continued to be denied the pension contributions that they were entitled to.

At Brighton Magistrates Court today, Wednesday 15 August, Shah admitted knowingly or recklessly providing false or misleading information to TPR. Deliberately providing false information to TPR about compliance with automatic enrolment duties is an offence under section 80 of the Pensions Act 2004.

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