Following the publication of the Pensions White Paper back in May this year, last week saw the publication of the Government’s White Paper on personal accounts.  It provides some long-awaited detail on how these accounts will operate without disturbing the current system for private pension provision.

Last week the Chancellor, Gordon Brown, delivered his Pre-Budget Report which alluded to further tax simplification changes being on their way. HM Revenue & Customs (HMRC) have now published a Technical Note heralding the tax changes which will mainly form part of the Finance Bill 2007. Of particular note is the proposal to allow ill-health pensions to be reduced once in payment. 

In this Alert we look briefly at some of the helpful proposals put forward by the Technical Note and the dates on which we can expect them to come to fruition.

Hot on the heels (relatively speaking) of the publication of the White Paper on State Pension reform in May this year, the Pensions Bill was published last week.  While there are a couple of pleasant surprises for occupational pension schemes, for the most part the proposals set out in the White Paper have been followed and the changes are therefore focussed on State benefits.

When the revised age amending regulations were laid before Parliament on 10 November the DWP stated that it was considering whether to give pension schemes a period within which to comply. 

The DWP has now confirmed it will not be giving pension schemes more time to get ready for age discrimination.  This disappointing news means schemes and employers may be exposed to the risk of claims if members or prospective members believe they are being discriminated against on age grounds from 1 December 2006 onwards (if no exemption or objective justification applies).

Last Friday, with just three weeks to go before pension schemes become subject to the new age discrimination legislation, revised amending regulations were laid before Parliament.  The new regulations build on the helpful changes in the draft consulted on in October, and it looks like we are now much closer to the Government’s original policy intention that pension schemes should on the whole be able to operate largely as before, leaving employers and trustees to focus on a few key issues. 

In this Alert we highlight some of the helpful changes made by the regulations in time for 1 December 2006 (the date for pensions compliance) and some of the significant issues remaining.

The Pensions White Paper was published in May 2006 and provided an insight into the Government's thinking on the future of UK state pensions.  On 30 October 2006, the DWP published its responses to the White Paper consultation and to the report of the Work and Pensions Select Committee (the "Committee") on pensions reform.

The Board of the Pension Protection Fund (the Board) has published revised guidance and standard documentation relating to contingent assets and also a consultation document setting out proposals for the 2007/8 risk based levy. 

2006 (like 2005 before it) has been another hectic year for pensions reform. But, despite the raft of changes already made in the name of pensions reform (see the “Table” at the end of this Alert), Chapter 2 of the recently published Pensions White Paper makes it clear that the Government’s pensions reform juggernaut is set to rumble on. And just where might it come to a halt?

It has been unclear, following the implementation of the European Pensions Directive into UK legislation, whether it is possible for occupational pension schemes to continue to have life cover only members as a separate category of membership.

Guidance from the DWP was published back in February on this important topic, but schemes were advised to wait for the Pensions Regulator’s guidance before taking precipitous action. The Regulator’s guidance was finally published on 30 June 2006.

In this Alert we look at the Regulator’s guidance in detail.

After a number of leaks in the press and alleged horse-trading behind the scenes, the Pensions White Paper was finally published on 25 May 2006. The White Paper gives us the Government’s thinking on the future of UK state pensions.

There are four headline messages in the White Paper:

• Basic state pension’s link to earnings will be restored in 2012 (or thereabouts)
• State pension age will move up to 68 by 2046
• Women’s pensions are set to improve
• Implementation of the National Pensions Savings Scheme

The Pensions Act 2004 will require that at least one-third of the total number of trustees of occupational pension schemes are member-nominated trustees or directors. The current proposal is that this moves up to 50% in 2009.

The Occupational Pension Schemes (Member-nominated Trustees and Directors) Regulations 2006 were laid on 16 March 2006. Much more recently, the Regulator’s code of practice was published in final draft. This document is important because it sets out guidance on how trustees should approach the nomination and selection process.

The Trustee Knowledge and Understanding (TKU) requirements under the Pensions Act 2004 are set to come into force on 6 April 2006. All occupational pension scheme trustees must have sufficient TKU of pensions and trusts law to run their schemes properly. Trustees must also be conversant with scheme documents.

The Occupational Pension Schemes (Trustees' Knowledge and Understanding) Regulations 2006 were finally laid on 16 March 2006. The Regulator laid the code of practice on 23 March 2006.

The cross-border road has been a series of twists and turns, with a final hairpin bend.

• The Regulator has revised its guidance on the meaning of contributions to confirm that contributions in respect of deferred members won’t count
• Schemes which still have active cross-border members on 29 March will have to register but could withdraw their applications if all cross-border members become deferred by 29 June 2006
• Schemes can now register by short-form email. This needs to be submitted by midnight on 29 March 2006

From 6 April 2006, members who leave their occupational pension scheme "early" (but with at least 3 months' service) will gain new rights. Following consultation documents published in July 2005, the regulations which encapsulate these new rights were laid before Parliament in January. But the accompanying code of practice from the Regulator has only recently followed suit.

The new early leaver requirements under the Pensions Act 2004 build on the existing protections for early leavers. But they do not disturb the magic two-year statutory threshold for members to be entitled to a deferred pension.

With 2006 less than three weeks old, the production line of Pensions Act 2004 regulations has begun again in earnest. From 6 April 2006, employers will have to consult with employees before certain changes (known as “listed changes”) can be made to a pension scheme. The new obligation, which follows a consultation document published back in June 2005, stems from the EC Directive on Informing and Consulting Employees.