Weekly update on new developments in the pension industry for week commencing 5 February 2018
PPF Amendment Regulations finalised
The Pension Protection Fund (Compensation) (Amendment) Regulations (SI 2018/95) have been published. They amend the Pension Protection Fund (Compensation) Regulations 2005 with regard to compensation payable from PPF to those with step-down pensions and come into force on 24 February 2018.
Consultation outcome - Draft NEST Amendment Order
The draft National Employment Savings Trust (Amendment) Order 2018 has been published, along with the government response to an earlier consultation.
The draft Order contains four separate provisions which will provide clarity to employers and members who use the NEST pension scheme and will facilitate the effective operation of the scheme. Specifically, the changes will improve the way the scheme can operate for participating employers and members and will:
- allow participating employers to contractually enrol their workers into the NEST pension scheme. Contractual enrolment will enable employers to consolidate their pension provision at the outset with one scheme;
- require NEST Corporation to carry out research with scheme members and participating employers or their representatives, in connection with the operation, development or amendment of the NEST pension scheme. The introduction of this duty is designed to align this operation to changes in data protection law (as a result of implementing the General Data Protection Regulation);
- give NEST Corporation the ability to close members’ pension accounts that have zero funds if certain conditions are met. This is because the number of empty accounts is creating inefficiencies and long run costs for the NEST pension scheme; and
- clarify that individuals may join the scheme in the event of a bulk transfer with consent and will require that any amount must be applied to a NEST member’s account as a result of a bulk transfer.
Automatic Enrolment (Earnings trigger and Qualifying Earnings Band) Order 2018
This draft statutory instrument sets our revised amounts for the 2018/19 tax year for the upper and lower thresholds of the automatic enrolment qualifying earnings band, and rounded figures for the earnings trigger and qualifying earnings band. The lower threshold is increased from “£5,876” to “£6,032” and the upper threshold is increased from “£45,000” to “£46,350”.
EIOPA: 2017 market development report on occupational pensions and cross-border 'IORPs'
The latest report
from the European Insurance and Occupational Pensions Authority provides an overview of the landscape for Institutions for Occupational Retirement Provision (IORPs) and Article 4 ring-fenced funds in the EEA, along with information on market trends and developments in cross-border arrangements of IORPs.
HMRC clarification on pension relief at source rules
HMRC has updated its guidance on changes affecting pension scheme administrators that reclaim tax relief using the relief at source (RAS) method, as a result of the introduction of the Scottish rate of income tax (SRIT).
The changes are intended to make sure that the correct rate of income tax will be applied by the pension scheme administrator as HMRC will be able to advise the correct rate of relief earlier in the preceding tax year.
The measure will have effect for the tax year 2017/18 and later tax years.
HMRC's guide Completion guidance for form RPSCOM100(Z) has also been updated
The updated guide for pension administrators - relief at source annual information returns is at
Appeal heard in Judges and Firefighters discrimination cases
The Employment Appeal Tribunal has upheld the January 2017 unlawful age discrimination claim in these cases, but granted the Lord Chancellor and Ministry of Justice permission to appeal to the Court of Appeal.
The decision concerns around 200 judges and 5,000 firefighters. It relates to transitional arrangements for new 2015 pensions arrangements and claims that these constitute unlawful age discrimination.
The Employment Appeal Tribunal held that the transitional arrangements in the New Judges Pension Scheme (NJPS) constitute unlawful age discrimination. Also, the EAT decided that the Employment Tribunal did not give adequate scrutiny to the Government’s arguments that equivalent transitional arrangements in the New Firefighters’ Pension Scheme were objectively justified, and remitted the case back to the ET for further consideration.
The decisions could have important consequences across other public service pension schemes but are also of interest to private sector schemes in terms of comments on the objective justification defence.
Increase in private pensions wealth
In a recent statistical bulletin - Wealth in Great Britain Wave 5: 2014 to 2016 – the Office for National Statistics has found that total private pension wealth increased to £5.3trn between July 2014 and June 2016, up from £4.4trn between July 2012 and June 2014. The ONS also found that 49 per cent of individuals aged 16 to 64 had some form of active private pension that they were contributing to, up from 44 per cent in the previous period.
John W. Wilson LLB(Hons) FPMI ACII, Head of Research| Email: firstname.lastname@example.org
Stephen Williams, Senior Research Consultant | Email: email@example.com