Week ending 30 August: TPR publishes FAQ on DC governance| Key developments in August
TPR publishes FAQ on DC governance
The Pensions Regulator (TPR) has published responses to some frequently asked questions on the new governance and charge control requirements, which came into effect from 6 April 2015. They cover
- Information about how to notify the Regulator of the appointment of a Chair of Trustees.
- Information on the non-affiliated trustee requirement in respect of relevant multi-employer schemes.
- Confirmation that there is no exception for non-UK residents from the requirement to obtain financial advice before they may transfer their DB (safeguarded benefits) to a DC arrangement. However, TPR adds that the DWP is considering whether amendments are needed in order to ensure that the transfer advice requirement operates as intended for non-UK residents.
TPR has also issued information for DC trustees on how to use the “adjustment measure”, which stops the charge cap from applying to a particular default investment arrangement. The adjustment measure can normally only be used before 6 October 2015 and there is a requirement to notify affected employers, members and TPR at least one month before the date on which the adjustment measure takes effect. So, the deadline for providing the necessary notifications is 5 September 2015. A form has been published for trustees to use to notify TPR that they intend to use the adjustment measure.
Key developments in August
- New employer covenant guidance. The Pensions Regulator has updated its guidance on assessing and monitoring the employer covenant. This guidance aims to identify good practice for trustees in assessing the strength of the employer covenant in relation to a DB scheme and takes into account the revised code of practice on funding defined benefits that was finalised in June 2014.
- Consultation on exit changes and transfer process. The government is consulting on a possible cap on the exit charges levied on the pension pots of members accessing their defined contribution savings flexibly. The consultation asks for feedback from the pensions industry on potential barriers to people accessing the new pensions freedoms and runs until 21 October 2015.
- 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.
- The Pensions Ombudsman has refused to uphold a complaint against the Campden RA Pension Scheme over an alleged miscalculation of a member’s deferred pension. In particular, he determined that the trustees of the defined benefit scheme were entitled to defer taking any action to address inequalities from Guaranteed Minimum Pensions (i.e. different payment ages and accrual rates) until required to do so by the government.
- Citywire Money reports that the government is planning to use the Autumn Statement to scrap higher rate tax relief for pension contributions in favour of a ‘matching’ system of flat rate relief.
The government has launched a pension consultation on options for reform of pension tax reliefs. But a source said the government is already drawing up plans to axe 40% and 45% tax relief.
It is understood that the Treasury is looking seriously at a ‘single rate’ that would enable the government to match contributions. Working on the basis that a rough average of the current rates of relief offered is 33%, the source said this would enable the Treasury to give £1 of relief for every £2 saved.
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