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

Government publishes draft legislation to introduce Lifetime ISAs

In the 2016 Budget, the Government announced that a new long-term savings product, to be known as a Lifetime Individual Savings Account or “Lifetime ISA” (“LISA”), would be introduced with effect from April 2017. On 7 September 2016, draft legislation (the Savings (Government Contributions) Bill 2016) was published to pave the way for this. The Bill sets out the legal framework for the payment of the Government bonus in relation to LISAs. Further detail is due to be set out in regulations in due course.

For further details, please see our Alert.

EIOPA publishes report on good communication practices

On 12 September 2016, EIOPA published its Report on Good Practices on Communication Tools and Channels for communicating to occupational pension scheme members. This follows the publication of its Consultation Paper in December 2015, examining existing practices to identify ideas for improving communications.

The report summarises EIOPA’s findings and puts forward a number of good practice suggestions regarding tools and channels for communicating with members of workplace pension schemes. EIOPA explains that the non-exhaustive list of good practice principles is not intended to be binding on any party nor subject to the “comply or explain” principle. Instead, the practices outlined in the report “depict existing rules and market practices in one or more Member States that have particular merits in improving the communication tools and channels to occupational pension scheme members”.

FCA publishes consultation on changes to Pension Wise

On 7 September 2016, the FCA published a consultation paper on proposed changes to the standards applied to Pension Wise.

The changes are required as a result of the Government’s decision to extend access to Pension Wise to individuals considering selling their annuity income from April 2017, and to contingent beneficiaries with an interest in these annuities.

The FCA states that, as with its standards for guidance at retirement, the changes proposed aim to:

  • ensure the guidance is impartial, consistent and of good quality across the range of delivery channels
  • create consumer trust and confidence in the designated guidance providers and in the content of the guidance, and
  • enable the designated guidance providers to deliver helpful guidance to individuals considering selling their annuity income and to their contingent beneficiaries.

The consultation also proposes minor changes to some of the existing standards, to reflect how consumers approaching retirement are using Pension Wise and how the service has evolved since it was established.

Comments on the consultation should be submitted by 4 October 2016.

HMRC: VAT on professional fund management costs – further extension of transitional period

On 5 September 2016, HMRC issued Brief 14 (2016), its latest in a long line of updates regarding the recoverability of VAT on professional fund management costs paid in respect of occupational pension schemes.

Significantly, Brief 14 (2016) (deduction of VAT on pension fund management costs following Court of Justice of the European Union decision in PPG) announces a further 12 month extension to the current transitional arrangements, so that the VAT treatment outlined in Notice 700/17 can continue to be used until 31 December 2017.

It also covers the options available to taxpayers who have already made changes to their structure or contractual arrangements to assist in the recovery of VAT.

For further details, please see our Alert.

HMT: Autumn Statement 2016 date confirmed

On 8 September 2016, the Chancellor of the Exchequer, Philip Hammond, announced that he will present his first Autumn Statement to Parliament on 23 November 2016.

HMT: Pensions Dashboard prototype to be ready by spring 2017

On 12 September 2016, Simon Kirby, Economic Secretary to the Treasury, announced that a prototype of the Pensions Dashboard is due to be ready by March 2017.

The proposal is that the “Pensions Dashboard”, first announced in the Budget 2016, will be a platform that lets savers see all their pension pots in one place and aims to help them to plan for their retirement more effectively. Simon Kirby said “Technology, like mobile phone apps, has made day to day banking easier than it’s ever been and it is time for pensions to catch up. Think of a future where you can compare your pension pots with the touch of a button. The Pensions Dashboard will unlock a huge amount of information that will help people make the best choices for them”.

Eleven of the largest pension providers, alongside the ABI who will manage the project, have agreed to build the prototype. The Government hopes to have the final product in place for consumers by 2019.

PPI publishes report on the distributional impact of state pension age rises

On 8 September 2016, the PPI published research exploring the potential effects of current and future rises in SPA on people of different regions, ethnicity, gender and socio-economic class, and on Government costs/savings. In March 2016 the Government launched an independent review into options for bringing forward the rise to age 68, and investigating options for further SPA rises.

The report looks at SPA rises in line with various recent mean average life expectancy projections. It notes that “if the Government wishes to prioritise the sustainability of the State Pension, then rises in SPA are inevitable”. In the absence of other changes, some groups would, it states, be more adversely affected by SPA rises than others. It suggests that there are “some policy options for mitigating the effects of SPA rises on those most adversely affected”, including tackling inequalities within society which lead to lower life expectancies for people from particular groups.