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
- Pension Schemes (Qualifying Recognised Overseas Pension Schemes) (Gibraltar) (Exclusion of Overseas Transfer Charge) Regulations 2021
- Consultation on changes to the NHS Pension Scheme regulations published
- DWP publishes response and further consultation on climate change regulations and guidance
- Government issues call for input on review of UK funds regime
- HMT publish responses to consultation on the reform of RPI
- HMT publish sixth Treasury direction covering extension of CJRS to 30 April 2021
- PASA’s cross industry working group update on GMP Equalisation
- Pension scams: WPC inquiry
- PPF publish levy rules for 2021/22
- TPR update on activities during Covid-19
Pension Schemes (Qualifying Recognised Overseas Pension Schemes) (Gibraltar) (Exclusion of Overseas Transfer Charge) Regulations 2021
On 27 January 2021, the Pension Schemes (Qualifying Recognised Overseas Pension Schemes) (Gibraltar) (Exclusion of Overseas Transfer Charge) Regulations 2021 were made. These regulations maintain the exclusion from the overseas transfer charge for recognised and onward transfers of pension savings, to a QROPS established in Gibraltar, following the UK leaving the EU.
These Regulations come into force on 18 February 2021. If a transfer is made between the end of the transition period (11pm on 31 December 2020) and the regulations taking effect, the scheme should withhold the overseas transfer charge amount from the transfer. The scheme can then make a further transfer of this amount to the QROPS in Gibraltar once the regulations take effect, as reporting and payment due dates do not fall until April 2021. If the overseas transfer charge is reported and paid prior to the due date, the scheme will be able to apply for a repayment of the charge once the regulations take effect.
On 28 January 2021, the Department of Health and Social Care published a consultation on changes to the NHS Pension Scheme regulations. The proposed changes include equalising the entitlement to survivor pensions for male survivors of female scheme members, following the decision of the Employment Tribunal in Goodwin v Secretary of State for Education. The consultation closes on 8 April 2021.
On 27 January 2021, the DWP published its response to the August 2020 consultation, “Taking action on climate risk: improving governance and reporting by Occupational Pension Schemes”, together with a consultation on draft regulations and statutory guidance which are intended to implement its revised proposals (see our Alert).
At the same time, the DWP published the final version of the Pensions Climate Risk Industry Group’s (“PCRIG”) non-statutory guidance for trustees of occupational pension schemes on assessing, managing and reporting climate-related risks in line with recommendations from the TCFD, although the formal response to the consultation on the non-statutory guidance is still awaited. The guidance covers trustee governance, strategy and risk management — how to integrate and disclose climate-related risks; scenario analysis; and setting metrics and targets to measure and manage climate-related risk. Full length and summary “quick start guide” versions of each part have been produced.
Alongside the consultation response and guidance, the DWP published a speech by the Minister for Pensions and Financial Inclusion, Guy Opperman, on “Pension schemes and climate-related risks”, announcing the publications and setting out some of the key changes to the original policy proposals.
In 26 January 2021, the Government published a call for input in relation to its review of the UK funds regime announced at the 2020 Budget. The call for input sets out the scope and objectives of the review, and invites stakeholders to provide views on which reforms should be taken forward and how they should be prioritised. The call for input closes on 20 April 2021 and the outcome of the consultation “will be published in Spring 2021 alongside regulations seeking to increase consolidation of the DC pensions market and to increase investment by pension schemes in ‘illiquid’ assets”.
The review also encompasses two separate workstreams. The first relates to the tax treatment of asset holding companies (“AHCs”) in alternative fund structures – the Government consulted on this last year (see 7 Days), and published its response to the AHCs consultation and launched a further detailed consultation on the proposals in December 2020. Secondly, the Government has committed to reviewing the VAT treatment of fund management fees and plans to take this forward in 2021.
On 28 January 2021, HMT published the industry responses to the consultation on the reform of RPI. This information follows the publication of the Government’s formal response to the consultation in November (see our Alert).
On 26 January 2021, HMT published a sixth Treasury direction (dated 25 January 2021) covering the Coronavirus Job Retention Scheme (“CJRS”) from 1 February to 30 April 2021, and extending the CJRS from 31 March 2021 until 30 April 2021 (see 7 Days). Employers will continue to be able to claim for 80% of an eligible employee’s salary, capped at £2,500 per month, in respect of hours not worked, and will be required to pay the employer NICs and employer auto-enrolment pension contributions on employees’ furlough pay.
HMRC have also published the first information about employers who claimed under the CJRS in December 2020, and the sixth Treasury direction confirms that it will continue to publish this information.
HMRC’s suite of guidance on the CJRS has also been updated with further detail and examples.
On 26 January 2021, the cross-industry GMP Equalisation Working Group published an update on its plans for 2021 in relation to GMP equalisation. Various further guidance materials are expected to be published during the year, including:
- guidance on the tax implications of GMP equalisation, which should be issued by the end of February 2021
- GMP conversion guidance, which should be ready by the end of April 2021
- supplemented methodology guidance to deal with intricacies in relation to anti-franking, which PASA is aiming to publish in the second quarter of 2021
- further “good practice” guidance on GMP communications, and on equalising past CETVs (timescales to be confirmed during Q1 of 2021)
- new regulations under clause 125 of the Pension Schemes Bill aiming to curb transfer fraud should be introduced “by September or October” 2021
- he supports the idea of a “mid-life MOT” to help members consider their retirement choices at an earlier stage than current “wake-up” packs, and is looking to take this forward
- HMT are evaluating the Pensions Advice Allowance and will report back in 2021, following criticism of its current level. The Pensions Advice Allowance was introduced on 6 April 2017 allowing certain pension scheme members to access a set amount of money from their DC pension pot tax-free to pay for retirement advice.
Also, in a recent response to a letter from the WPC, the Economic Secretary to the Treasury, John Glen MP, confirmed that through changes introduced in 2013, HMRC has been able to “detect, disrupt and deter” promoters of liberation schemes, resulting in an 88% reduction in applications for scheme registration since 2013. Glen added that, using the “fit and proper person” test introduced in 2014, HMRC has also de-registered 770 schemes that were used as liberation vehicles.
On 26 January 2021, the PPF published its final levy rules for the 2021/22 levy year. As confirmed by the PPF in December (see 7 Days), the levy estimate for 2021/22 is £520 million (retaining a levy scaling factor of 0.48). The published rules confirm that:
- the “small scheme adjustment” will be implemented, to better reflect the risk posed by these schemes. Risk-based levies for schemes with less than £20 million in liabilities are halved, with the reduction tapering between £20 and £50 million of liabilities. The PPF expects this “to be a long-term feature of the levy”
- the PPF will reduce the risk-based levy cap to 0.25% of liabilities, from 0.5%. This will be kept under review for future years
- the PPF has made a few minor changes to their rules and guidance which are intended to clarify, amongst other things, their operation post Brexit. Schemes intending to certify a guarantee should consider whether an updated legal opinion will be required
- soft copy submission of contingent asset documentation, such as a guarantor strength report, is required from this year
- trustees and employers who intend to put in place or retain contingent assets should start the process as soon as possible, The deadline for certification / re-certification on Exchange is midnight on 31 March 2021. Relevant documentation must be sent to the PPF by email by 5pm on 1 April 2021
- the PPF will continue monitoring the impacts of COVID-19 on schemes and sponsors, and “respond flexibly” to issues that arise.
The PPF has also published draft guidance for commercial consolidators. The guidance will be open for consultation until 16 February 2021.
See our forthcoming Alert for further detail.
TPR has further updated information on its activities during COVID-19, stating that it will continue to keep schemes in Relationship Supervision updated, either directly through the supervisor, or through other communication channels, such as its regulatory round-up newsletter. TPR will continue to review its engagement with schemes as the situation surrounding the pandemic evolves, returning to the full evaluation cycle when possible.