7 days

7 Days is a weekly round up of developments in pensions, normally published on Monday afternoons. We collate this information from key industry sources, such as the DWP, HMRC and TPR.

In this 7 Days:

Pensions Act 2014 receives Royal Assent
DWP publishes SPA timetables
HMRC issues Newsletter 62
Treasury issues Preston guidance: May 2014
TPR’s governance survey highlights liberation and automatic enrolment results
TPR consults on regulatory procedure

Pensions Act 2014 receives Royal Assent

The Pensions Act 2014 received Royal Assent on 14 May 2014. While its main purpose is to implement the new single tier State pension, it also contains several key measures for occupational pension schemes.

The Act:

provides for the new single tier State pension to be implemented on 6 April 2016
abolishes DB contracting-out with effect from the same date, but provides employers with a statutory power to amend their schemes to take account of increases in their NICs
increases SPA from age 66 to age 67 between 2026 and 2028
introduces a new statutory objective for TPR
puts in place a framework for, and requires regulations be made to introduce, a system of automatic transfers for certain members of workplace pension schemes
will remove the ability to make refunds of contributions to members of DC schemes
provides for regulations to be made to restrict the administration charges that may be imposed on members of certain pension schemes and to introduce administration and governance requirements
requires the Government and the FCA to legislate / make rules to require the disclosure of information about some of all of a DC scheme’s (both occupational and personal) transaction costs and administration charges
increases the PPF compensation cap for individuals with long service.

For further details please see our Alert.

DWP’s press release.

DWP publishes SPA timetables

On 15 May 2014, the DWP published tables which show how the legislated increases in SPA will be phased in.

The Pensions Act 2014 provides for a regular review of SPA, at least once every five years. The Government is not planning to revise the existing timetables for the equalisation of SPA to 65 or the rise in SPA to 66 or 67. However, the timetable for the increase in SPA from 67 to 68 could change as a result of a future review. Before any future changes could become law Parliament would need to approve the plans.

HMRC issues Newsletter 62

On 13 May 2014, HMRC published Newsletter 62. It includes information on:

applications for FP14 – the window for applications closed on 5 April 2014
arrears of annuities – explaining when arrears can constitute authorised pension payments under the FA04.
pension scheme registration – common questions HMRC receives
pension scheme transfers – HMRC’s timescale for response to a request for information
new email address for queries relating to HMRC’s processes –pensions.businessdelivery@hmrc.gsi.gov.uk

Treasury issues Preston guidance: May 2014

Following the ECJ and House of Lords’ rulings in 2000/2001 in favour of part-timers gaining retrospective access to occupational pension schemes, provided they meet the necessary legal requirements, the Preston factors (Earnings and Interest factors) are provided for employers.

The factors are used to provide those entitled to reinstatement, an opportunity to gain pension service at no cost to them, which as far as possible makes these individuals no better and no worse off than if they had paid contributions to the scheme when they were originally employed.

HMT has now published the Preston guidance for 2014.

TPR’s governance survey highlights liberation and automatic enrolment results

On 15 May 2014, TPR published its eighth governance survey.

Key findings on pension liberation fraud include:

large schemes are more likely to be aware of pension liberation fraud (99%) than small schemes (88%)
among the schemes aware of pension liberation fraud, eight in ten (78%) schemes have processes in place to combat pension liberation fraud, with one in seven having suspected such activity in transfer requests
at an overall level, two in three schemes (64%) are already discussing pension liberation fraud at trustee meetings, with around half using the transfer pack insert (56%) and action pack (49%) provided by TPR.

Key findings on automatic enrolment include:

over a quarter of schemes surveyed (28%) are being used or planned to be used for automatic enrolment, and these schemes are more likely to demonstrate a number of positive governance traits
these schemes are more likely to have documented internal controls (82% compared to 71%) and are more likely to receive formal reports on administration standards at least quarterly (56% compared to 40%).

TPR will be publishing research results around the presence of its DC features in schemes, including master trusts, in the coming weeks.

TPR consults on regulatory procedure

On 16 May 2014, TPR launched a six week consultation into the procedure it follows in cases where the decision is made by the executive arm of TPR rather than the Determinations Panel.

Powers exercised in this way include some types of trustee appointments, issuing clearance statements and improvement notices.

TPR has also today published some amendments to its current Case Team procedure, which aim to make the procedure clearer and more transparent. The changes, effective from today, include a requirement for the regulator’s case teams to set out their views on the merits of certain applications in greater detail, and to clarify the case team’s role in investigations under special procedure.

No changes have been made to the current Determinations Panel procedure.