Alerts

Focusing on breaking news

• GMP conversion - the facts

  Amendments made to the Pension Schemes Act 1993 by the Pensions Act 2007, included a facility to allow contracted-out occupational pension schemes to convert members' Guaranteed Minimum Pensions (GMPs) into ordinary scheme benefits. On 2 September 2008, following a commitment made in Parliament to consult before bringing the facility into force, draft Amendment Regulations were published for consultation by the Department for Work and Pensions. The consultation period closes on 28 October 2008.

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• Anti-money laundering - HMRC u-turn

  Since 15 December 2007, "trust or company service providers" (TCSPs) who are providing their services "by way of business" must comply with certain anti-money laundering requirements, including registering with HM Revenue and Customs (HMRC). As we reported back in February, this definition may have included all paid trustees. But HMRC published revised guidance on who needs to register as a TCSP today, 31 July 2008. Whilst the guidance could be clearer, the upshot is that occupational pension scheme trustees are generally excluded from the need to register. This is because one of the exclusions from registration specifically recognises that occupational pension schemes are a low risk area.

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• Countdown to the new transfer value regulations

  Time is ticking! As many trustees are already keely aware, there are now only two months to go before revised transfer value legislation finally becomes law on 1 October 2008. The lengthy consultation process started as long ago as May 2005 when the Actuarial Profession first published proposals for a major revision of their guidance note on transfers (GN11). Amendments to The Occupational Pension Schemes (Transfer Values) Regulations 1996 provide for cash equivalent transfer values (CETVs) to continue to be based on the expected cost to the scheme of providing members' benefits. However, calculations will need to be done on a scheme specific basis, with trustees required to determine the assumptions. The amendments affect both defined benefit and defined contribution arrangements, but the greatest impact is on the former.

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• Risk sharing - the Government consults

  Private sector pension provision in the UK has traditionally been dominated by defined benefit (DB) schemes. However, since the DB heyday of the late 1960's when nearly 8 million people were contributing to DB pensions, private sector employers have moved in droves towards defined contribution (DC) alternatives. Shared risk schemes are seen as potential alternatives to (or the middle ground between) the opposing models (in terms of risk) of DB and DC. Following a highly publicised campaign by the Association of Consulting Actuaries (ACA) (amongst others) in support of shared risk schemes, the Government has finally launched a consultation seeking views on their viability. The consultation closes on 28 August 2008.

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• Proposed extension of anti-avoidance powers

  The Department for Work and Pensions (DWP) has announced its intention to enhance the Pensions Regulator's powers "to require contributions to pension schemes when sponsor actions materially reduce the security of member benefits". This announcement comes amidst growing Government concern over the introduction of "business models that look to sever the link between employer and scheme", which are seen as potentially undermining the traditional employer/trustee relationship to the possible detriment of members.

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• Clearance - more obstacles in the way?

  Clearance was introduced in April 2005 as a voluntary process to meet concerns about how the Pensions Regulator was going to use its anti-avoidance pwoers. The original clearance guidance was understandably focused on process. But reflecting three years of experience, the revised guidance now looks at when clearance may be available. The guidance is structured on a set of "guiding principles" which ask the parties to look at the true effect of an event on the pension scheme. The draft guidance was published for consultation in September 2007. The 6 month wait before the final guidance was published on 20 March shows the industry concern caused by the Regulator's increasing confidence in this area.

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