Developments in Employee Benefits law and practice

22 October 2018

The evolving retirement landscape and the impact on tax and benefits

The Pensions Policy Institute has issued a briefing that explores the impact that retirement income decisions, which have changed significantly since the introduction of pensions freedom and choice, may have on individual and State finances. The key questions addressed in the Briefing Note are:

  • How might taxation be impacted by evolving retirement income patterns?
  • How might means-tested benefits be impacted by evolving retirement income patterns?

These are explored both in terms of the way that they will impact individuals’ income in retirement and also how aggregate changes could impact State finances.

Finance (No.3) Bill to be published on 7 November

In a written statement to the House of Commons and the House of Lords, the Financial Secretary to the Treasury announced that the Finance (No.3) Bill will be published on Wednesday 7 November 2018. Explanatory notes on the Bill will be available in the Vote Office and the Printed Paper Office and placed in the Libraries of both Houses on that day. Copies of the explanatory notes will also be available on GOV.UK.

Although traditionally announced in the early afternoon after PMQs, the Treasury has confirmed that the Chancellor will deliver his Budget at 3:30pm on Monday 29 October.

Support for pension tax relief reform

The second report in a series exploring the findings of the 2018 Association of Consulting Actuaries (ACA) Pension trends survey has found strong employer support for reform to the current pension tax regime. The ACA says reform should be calmly undertaken, as the present regime is not fit for purpose.

£20bn in lost pension pots

The scale of the UK’s lost pensions mountain is exposed in new research carried out on behalf of the Association of British Insurers (ABI). In the largest study yet on the subject, the Pensions Policy Institute (PPI) surveyed firms representing about 50% of the private defined contribution pensions market. From this PPI found 800,000 lost pensions worth an estimated £9.7 billion. It estimates that, if scaled up to the whole market, there are collectively around 1.6 million pots worth £19.4 billion unclaimed – the equivalent of nearly £13,000 per pot. This figure is likely to be even higher as the research did not look into lost pensions held in the public sector, or with trust-based schemes typically run by employers.

Government response opens door to new pensions landscape for the UK

The Work & Pensions Committee has published the Government’s response to its report on Collective defined contribution pension schemes, ahead of a Motion in the House of Commons on the proposed new type of pension. The response is published alongside correspondence with Royal Mail, who reached the deal with the Communication Workers Union (CWU) that led to the possibility of the introduction of CDC pensions – already in effect in The Netherlands and Denmark- in the UK. Commenting on the Government’s response, Rt Hon Frank Field MP, Chair of the Committee, said:

“This is a great response and a great news story for everyone, a real win-win situation. I applaud the Government for the approach it is taking. The historic deal struck between Royal Mail and CWU, combined with the Government’s ready willingness to make CDC pensions a reality, mean a huge change is coming to the UK pensions landscape, offering a new and different kind of ‘pension choice’”

On a related note, speaking at the Pensions & Lifetime Savings Association conference, Guy Opperman has promised a substantial parliamentary bill acting as a roadmap for the long-term future of private pensions will lead to a significant period of calm. The pensions and financial inclusion minister is bidding for a legislative slot in next year's Queen's Speech, which will be delivered sometime in the summer, to bring a “substantial private pensions bill”.

FCA/TPR: Regulating the pensions and retirement income sector - joint regulatory strategy

The Financial Conduct Authority and The Pensions Regulator have launched a joint regulatory strategy aimed at strengthening their relationship and addressing the risks and harms in the pensions and retirement income sector. The regulators’ main concern is to address the issue of people not having adequate income, or the income they expected, in retirement and they are some of the key issues that lead to this.

AE contribution increases have not been onerous nor deterred savers

According to new research from The Pensions Regulator –

  • At least 93% of the employers across all three sizes were aware of each individual ongoing duty in relation to automatic enrolment.
  • The majority of employers did not have any difficulty with ongoing duties, finding them less onerous than they expected.
  • Around half of micro employers and around three fifths of small were aware of their re-enrolment duty, a decrease from the previous surveys. However, almost all were confident in their ability to comply.
  • The majority of employers of all three sizes found the process of implementing the April 2018 contribution increase easy. Smaller employers were most likely to use an external payroll provider to complete the entire process on their behalf.
  • Few members asked to leave their scheme as a result of the April 2018 increase in minimum contributions.
  • Awareness and knowledge of the second (April 2019) increase in minimum contributions has risen over time.
  • Employers of all three sizes were generally positive about the increases in minimum contributions in April 2018 and April 2019, although around a third anticipated difficulty meeting the increased minimum employer contributions.
  • Most of the employers who had been approached by their staff for pension information or advice were confident they could deal with such requests and did not see a need for additional support to help them with this.

Master Trust Code in force

The Pensions Act 2004 (Code of Practice) (Authorisation and Supervision of Master Trusts) Appointed Day Order (SI 2018/1097) appoints 18 October 2018 as the day for the coming into effect of the Pensions Regulator’s Code of Practice No. 15: Authorisation and supervision of master trusts.

Government response to the household finances report

Further to The Treasury Select Committe’s July 2018 report, which recommended, amongst other matters, that FCA should move forward with regulation to limit cost of high-cost credit and that the Lifetime ISA be abolished, TSC has now published the Government response and comments on it, saying “the Government’s rehashing of existing policies in its response adds nothing new … The Treasury has not moved on several of the Committee’s recommendations, or demonstrated an increased sense of urgency required in some key areas identified by the Committee”.

HMRC publishes October Employer Bulletin

HMRC has published the October edition of its Employer Bulletin which includes guidance with regard to the closure of the childcare voucher and directly contracted childcare schemes which closed to new entrants on 4 October 2018.

PPF update on Hampshire case

Following the judgment of the Court of Justice of the European Union (CJEU) last month, the Pension Protection Fund have started to write to capped members who they believe are affected by the ruling. This is to confirm PPF records, because they do not have all the data needed need to calculate the increase due. PPF will be writing in tranches over the coming weeks. Once PPF have written to capped members, they will begin to contact members approaching retirement age who they believe will be capped, schemes in assessment and any other remaining non-capped members who PPF believe may also be affected.

The vast majority of PPF and Financial Assistance Scheme (FAS) members will already receive compensation in excess of 50 per cent of their accrued old age benefits and PPF expect the number of eligible members affected by this ruling to be very small.

PPF continue to work closely with the Department for Work and Pensions (DWP) to make sure their approach is likely to be consistent with the necessary future changes to legislation. In advance of legislation, PPF are putting in place an interim process to uplift payments now.

IHT payable following pension transfer by terminally ill member

The Court of Appeal has held that a terminally ill woman, who transferred retirement savings into a personal pension plan six weeks before her death, is still liable for inheritance tax on the money.


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

Stephen Williams, Senior Research Consultant | Email: