Developments in Employee Benefits law and practice

25 November 2018

ACA and Royal London call for radical simplification of DB pension rights

A new paper published by the Association of Consulting Actuaries and Royal London argues that consumers and employers could reap substantial benefits if the complex patchwork of defined benefit pension rights could be radically simplified. The paper argues that this would cut costs for schemes, make it easier for people to transfer pensions from one arrangement to another, would help people to understand their pensions better and could remove barriers to major consolidation in the DB sector.

The paper: ‘Simplifying pension benefits – is it time for the Pensions Pound?’ starts by describing the complex way in which people’s pension rights in defined benefit pension schemes have built up over the years. One total pension figure can be made up of a dozen different ‘slices’, each of which can have different rules about the way it has to be revalued up to retirement, indexed through retirement and how far it is covered by the Pension Protection Fund. Rules can vary according to when the pension was earned, how it interacts with the state pension system and how it reflects rules on gender equality.

The paper suggests the creation of a ‘pension pound’ into which all the complexity of any individual’s current pension rights could be converted. These pension pounds would then be converted back into a set of standardised DB pension rights which could be common across all schemes.

TPR publishes guidance on triggering event duties for master trusts 

Those involved with running master trust pension schemes have a duty to notify The Pensions Regulator (TPR) about certain triggering events that may indicate that the scheme cannot continue to operate. TPR has now published guidance on this duty.

If a master trust experiences a triggering event, there are notification duties for trustees, scheme funders and scheme strategists. TPR has also published the revised forms that should be used to tell it about a triggering event, or when one has been resolved. Triggering events may indicate that a scheme cannot continue to operate. During a triggering event period, the scheme will not be able to: increase or introduce new member charges; or accept new employers.

Master trusts will also now need to submit an implementation strategy to TPR within 28 days starting with the triggering event (or 28 days starting with the decision to refuse or withdraw authorisation becoming final). Failure to notify TPR of a triggering event by the relevant deadline may result in a fine.

Private tax drivers were ‘workers’ 

In Addison Lee Ltd v Lange and others UKEAT/0037/18, the Employment Appeals Tribunal was asked to consider an appeal against an employment tribunal decision where the tribunal held that Addison Lee drivers were workers for the purposes of the Employment Rights Act 1996, Working Time Regulations 1998 and the National Minimum Wage Act 1998.

Mr Lange and his two colleagues worked as drivers for Addison Lee Limited. The firm provides private-hire taxis as well as courier services. Their drivers were provided with induction, training and documentation that indicated how they should do the job. Drivers usually hired vehicles from an associated company of Addison Lee and were given hand-held computers that allocated jobs to them. When a driver was notified of a job via the system, they had to accept it. There was no promised of a specific amount of work but drivers were told that in general they could expect to work around 50 to 60 hours a week. 

The EAT, in a decision that could have implications for those who need to be assessed for automatic enrolment, dismissed the appeal and upheld the original employment tribunal decision.

Agreement in principle on the framework for the future UK-EU relationship 

On 22 November 2018, the UK government and the European Commission announced agreement in principle on the wording of a political declaration on the framework for the future EU-UK relationship. 

An outline of the political declaration was published on 14 November 2018, along with the full text of the draft Withdrawal Agreement. 

Following further talks, the full text of the political declaration has been agreed in principle, with both the UK government and European Commission urging its endorsement at a special European Council meeting scheduled for 25 November 2018. 

TPR orders firm to pay back over £700,000 in contributions

This publication lists the proposed benefit rates and pension rates for 2019 to 2020 as set out in the written ministerial statement made by the Minister for Family Support, Housing and Child Maintenance, Justin Tomlinson, in the House of Commons on Friday 23 November 2018. 

FCA CP 18-34 and single financial guidance body

The FCA has confirmed, in a new consultation paper, that pensions guidance and debt advice will continue to be funded by FCA-regulated firms once the new single financial guidance body is introduced. 

Pension Wise service evaluation 2017 to 2018: customer experiences and outcomes 

This report presents findings from a quantitative evaluation of the Pension Wise service in the financial year 2017 to 2018.

Draft Insolvency (Amendment) (EU Exit) Regulations 2018 

These draft regulations relating to Brexit contain several provisions relevant to occupational pension schemes:

  • Provisions regarding the application or notification route for PPF entry set out in regulations 7 and 7A of the Pension Protection Fund (Entry Rules) 2005 (SI 2005/590)

  • Provisions in Chapter II of Part VII of the Pension Schemes Act 1993 regarding the circumstances in which an application may be made to the Secretary of State for reimbursement of unpaid employer contributions on an employer’s insolvency.

 

Contact:

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