Employee Benefits Updates | New Pension Flexibilities

05 July 2015

Week ending 5 July: Latest on the new pension flexibilities| HMRC publishes updated list of ‘ROPS’ | State pension confusion

Latest on the new pension flexibilities

The Pensions Regulator

The Pensions Regulator has published a statement saying that it has started work on a survey on the prevalence of exit fees and charges and the transfer process in occupational defined contribution pension schemes. It plans to publish the results of this survey later in the summer.

Also, the Pensions Regulator (TPR) is considering bringing its guidance to trustees of large schemes on communicating new retirement flexibilities into line with Financial Conduct Authority (FCA) rules.

TPR chairman Mark Boyle said TPR was consulting with the government and FCA about introducing requirements for large trust-based schemes and master trusts that were “as similar as possible” to the FCA's stance.

Financial Conduct Authority

FCA has published a press release, which provides a synopsis of the regulator’s activities on pensions, its ScamSmart campaign and a market update. FCA has sent all pension and retirement income providers a request for information about any barriers faced by customers who wish to access their pension savings (to be provided by 7 August 2015).

National Employment Savings Trust

NEST has launched its blueprint for a retirement income strategy suitable for its members, who represent the ‘DC dependent’ generation in the new pensions landscape. The blueprint sets out three building blocks - an income drawdown fund, a cash lump sum fund, and a later life protected income fund - to cover three phases of later life.

“The future of retirement: A retirement income blueprint for NEST’s members” sets out three building blocks to cover three phases of later life: from mid 60s to mid 70s, mid 70s to mid 80s and mid 80s and beyond -

  • An income drawdown fund – to provide a steady income that aims to protect members against inflation, as well as give them full flexibility to change their mind and withdraw some or all of their money.
  • A cash lump sum fund – to be highly liquid so it can be used by members for unexpected events without impacting their core income stream. If market conditions are good in the drawdown fund then this pot can be topped up with additional lump sums. This would be a fund from which members could move money in ad hoc lump sums into their bank account to use as they like.
  • A secure income is available for the remainder of a member’s life to protect against the risk of running out of money before they die.

Pension Wise

The guidance service, Pension Wise, is to expand its service, according to Citizens Advice.

The service, which is currently open to members of the public from six months before their 55th birthday, is set to reduce the age criterion to 50 from this month.

An update posted by the Peterborough branch of Citizens Advice on its Facebook page said that the Treasury had made changes to the eligibility for Pension Wise appointments.

Association of British Insurers

The Association of British Insurers has set out what is needed to ensure the government’s plans to create a secondary market for the selling of annuities can work for consumers, and had urged the government not to rush the proposals through for 2016.

The ABI’s says clarity is needed around:

How the rights of dependents and beneficiaries will be protected, particularly as many of them will be older people who may be vulnerable due to illnesses and reduced mental capacity.

  • How people will be protected from scams and fraud.
  • The exact scope of the proposals, which must be well defined, so that consumers are clear about exactly what is included.
  • Whether consumers are allowed to sell their annuities back to the provider they originally bought them from, recognising that providers are not obliged to ‘buy back’.

HMRC publishes updated list of ‘ROPS’

On 1 July, HMRC posted an updated “List of Recognised Overseas Pension Schemes notifications”, with a warning that

“HMRC can’t guarantee these are Recognised Overseas Pension Schemes (ROPS) or that any transfers to them will be free of UK tax. It is your responsibility to find out if you have to pay tax on any transfer of pension savings.”

The long list of Australian QROPS which appeared on the last list has been reduced to a single scheme (the “Local Government Superannuation Scheme) due to the inability of other scheme to meet the pension age test of 55 (as the minimum age for taking benefits).

The list was re-issued on 2 July with further, very minor changes.

State pension confusion

A Saga survey of 10,010 over 50s has shown confusion over the plans to introduce a new flat rate state pension in April 2016, with a third of respondents believing the new system would be more generous, a third thinking it would be less generous and the remainder having no idea.

People in their 50s were less positive, with just a quarter thinking it would be a more generous system. Just 16% of people in their 50s believed they would go on to receive the new pension and a third thought they would not.

The new flat rate pension is more generous for the lower paid and less so for higher earners. However, the public perception is quite the reverse in that just 28% of those in socio-economic group DE believe the new pension will more generous compared with 36% of those in socio-economic groups AB.

Only 7% of people in their 50s said they were sure they knew about how to make extra National Insurance top up payments to secure a better state pension.

Saga is calling for the government to write to all those approaching retirement with individual pension predictions along with a proper explanation the new system and to draw attention to arrangements that allow people to make top up payments so they can qualify for a better pension.

Pensions Act (Northern Ireland) 2015 receives Royal Assent

The Pensions Act (Northern Ireland) 2015 received Royal Assent on 23 June 2015. The Act largely mirrors the provisions of the Pensions Act 2014 (PA 2014), which received Royal Assent on 14 May 2014, and covers:

  • Introduction of the single-tier state pension from 6 April 2016.
  • Bringing forward the state pension age (SPA) to age 67.
  • Allowing the Department for Social Development to restrict the level of charges that may be imposed on members and to impose governance and administration requirements on schemes.
  • Introduction of a new framework for the automatic transfer of members' small DC pots.
  • Introduction of a new statutory objective for the Pensions Regulator to “minimise any adverse impact on the sustainable growth of the employer”.

Finance Bill 2015

The first Finance Bill of the new Parliament will be published on 15 July 2015. The contents of the Bill will be confirmed in the July 2015 Budget on 8 July 2015.

Pensions Ombudsman publishes 2014/15 Annual Report and Accounts

The Pensions Ombudsman Service has published its 2014/15 Annual Report and Accounts. The report includes information on the Ombudsman’s operational and financial performance as well as case studies with examples of investigations carried out during the year. Key points are:


  • There was a 21% increase in the number of enquiries the Ombudsman received
  • 1,281 cases were taken on for investigation, 22% more than expected
  • 970 investigations were completed. 48% of these were concluded by the Ombudsman’s investigators and did not require an Ombudsman decision
  • Just over one third of cases decided by an Ombudsman was upheld in full or part
  • 72% of investigations took under a year to complete
  • Cases about the actions of the Pension Protection Fund remained a small part of the work, with 72 new in the year (an increase of 16.7%)
  • 177 complaints were received concerning alleged pension liberation (a number were determined earlier this year)


  • Enquiries were responded to within an average of 2 days (the target was 3 days)
  • Decisions on whether or not to investigate a complaint took 4 weeks on average (the target was 7 weeks)
  • Investigations were completed in an average of 9.8 months (the target was 10 months)
  • 970 investigations were completed compared to 1115 in 2013/14, this was due, in part, to dealing with the large number of the pension liberation cases and a delay in replacing staff

Running the office

  • The Ombudsman stayed within budget, with costs of £3.291m
  • At the end of the year the Ombudsman had 39 employees

Greek bank accounts: advice about State pension

The Greek government has announced a bank holiday until 6 July and implemented restrictions on its banking system. International payments into Greece are exempt from these restrictions. UK government payments, including State Pension and public service pension payments, will continue to be made into Greek accounts in the usual way.

The situation remains fast moving and uncertain, and the government recognises customers may be concerned. The Department for Work and Pensions (DWP) will attempt to contact people that draw a British State Pension from a Greek bank account, and help people to switch these payments to a non-Greek bank account if they wish.


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