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
- Draft Teachers’ Pensions Schemes (Miscellaneous Amendments) Regulations 2017 published
- Draft National Health Service Pension Scheme and Additional Voluntary Contributions (Amendment) Regulations 2018 published
- DWP consults on changes to NEST
- FRC issues revised Practice Note 15 and withdraws Practice Note 22
- FRC publishes thematic review of pension disclosures
- HMRC issues updated VAT guidance
- HMRC consultation on draft overseas transfers regulations: update on closure date
- House of Commons Treasury Committee launches inquiry into household finances
- PPI publishes report on the impact of DC asset pooling
- Perceptions of The Pensions Regulator 2016–17 report published
- TPR succeeds in first prosecutions for failing to give staff workplace pensions
- New scheme return information requirements for 2017-18
The Teachers’ Pensions Schemes (Miscellaneous Amendments) Regulations 2017 were laid before Parliament on 9 November 2017, and come into force on 30 November 2017. They make a number of amendments to the Teachers’ Pensions Regulations 2010 and the Teachers’ Pension Scheme Regulations 2014, and aim to provide clarification where ambiguity exists and to ensure the legislation provides for the policy intention. The amendments also aim to ensure equal treatment, in relation to the conditions required to qualify for ill-health benefits, between those in the final salary Teachers’ scheme and those in the career average scheme.
Draft National Health Service Pension Scheme and Additional Voluntary Contributions (Amendment) Regulations 2018 published
The Department of Health has published a consultation seeking views on the draft National Health Service Pension Scheme and Additional Voluntary Contributions (Amendment) Regulations 2018. Proposed changes to NHS pension scheme regulations include:
- the removal of the need for a nomination form for unmarried or cohabiting partners to claim survivor pensions
- ensuring access to the pension scheme for staff delivering services under new integrated care models
- technical changes to improve the operation of scheme regulations.
The consultation closes on 29 December 2017.
On 7 November 2017, DWP released a consultation seeking views on proposals to improve NEST for the benefit of employers and members.
The proposed changes, to be made by the draft National Employment Savings Trust (Amendment) Order 2018, aim to:
- allow participating employers to contractually enrol their employees into NEST after their staging date. Currently NEST rules only allow workers to join who have been contractually enrolled (or have joined by another form of consent) before their employer’s staging date, but not afterwards. As the staging process for auto-enrolment ends in February 2018, a change was required
- clarify that individuals may join NEST in the event of a bulk transfer with consent, and require that any amount must be applied to a member’s account as a result of a bulk transfer
- give NEST the ability to close members’ pension accounts that have zero funds if certain conditions are met
- requiring NEST to carry out research from time to time on scheme members, participating employers and their representatives, in connection with the operation, development or amendment of the scheme. This means that NEST will be able to rely on this duty to demonstrate that it meets the GDPR requirements on lawful data processing when carrying out research.
The consultation closes on 27 November 2017, and the intention is that the Order will come into force on 1 April 2018.
On 8 November 2017, the FRC issued a revised Practice Note 15: The Audit of Occupational Pension Schemes in the UK. Practice Notes are intended to assist practitioners in complying with the requirements of UK auditing standards, by providing additional contextual material on the application of those standards in particular circumstances or in specialised sectors.
The revisions to Practice Note 15 reflect:
- revisions to UK auditing standards (ISAs (UK))
- changes to UK accounting standards (FRS 102) and the revision of the pension SORP
- continuing developments in regulatory codes and guidance issued by TPR
- changes in relevant legislation, and
- the increase in master trusts in the pension sector.
The FRC is also withdrawing Practice Note 22, “The auditor’s consideration of FRS 17 ‘Retirement Benefits’ – Defined benefit schemes”. This Practice Note was issued in 2002 and the guidance in it has been superseded by the UK auditing standards issued since then.
The FRC has also published thematic reports to help companies improve the quality of their corporate reporting in acknowledged areas of difficulty, including pensions disclosures.
The report states that low interest rates and the economics of DB pension arrangements have increased the need for companies to improve the transparency of their pension reporting: “Key to this is helping users understand the factors that could affect the future expense and cash flows of the company. This report shares our detailed findings from a targeted review of certain aspects of pension obligation reporting. Companies can use this to assess and enhance their own disclosures to ensure that they provide high quality information to investors in their annual reports and accounts.”
After a long wait, HMRC has revised its internal VAT manual to make clear that the VAT treatment for professional fund management costs outlined in Notice 700/17 (the so-called 70/30 recovery method) will no longer be withdrawn from 31 December 2017. HMRC’s guidance confirms that this method, alongside those alternatives set out following the CJEU decision in PPG, may all continue to be used going forward.
By way of reminder, following the CJEU’s judgment in the ATP case, HMRC accepted that UK DC pension funds which have certain key characteristics are “special investment funds” (SIFs), and therefore exempt from VAT.
However, with effect from 1 January 2018, insurers will no longer be permitted to treat their supplies of non-SIF pension fund management services as VAT exempt insurance.
Please see our Alert for further detail.
We reported that, on 3 November 2017, HMRC published the Pension Schemes (Application of UK Provisions to Relevant Non-UK Schemes) (Amendment) Regulations 2018 for consultation.
We noted that the date for the closure of the consultation was not clear, as HMRC’s website noted that it closed on 15 December 2017, but the draft explanatory memorandum referred to a closing date of 28 November 2017. HMRC has since confirmed to us that 15 December 2017 is the correct closing date and that the Explanatory Memorandum would be corrected.
On 8 November 2017, the House of Commons Treasury Committee launched an inquiry into household finances.
The Committee intends to “take a broad look at the state of UK household balance sheets, including whether households are saving adequately in the current economic environment”. It will scrutinise problematic indebtedness, inter-generational issues, lifetime financial planning, and the effectiveness of the market in financing solutions and products to low income households.
The terms of reference state that, among other things, the Committee will consider what role the State Pension and triple lock can and should have in supporting lifetime household finances, and whether retiring households receive adequate and appropriate financial advice following the implementation of pension freedoms.
The deadline for written submissions is 31 December 2017.
The PPI has published a report, commissioned by Schroders, called “The impact of DC asset pooling: international evidence”. It draws on evidence from large DC schemes in Australia, South Africa, Mexico and Italy to explore the potential link between larger schemes and better member outcomes, as well as the reasons behind consolidation in these countries, and the lessons that may be relevant to the UK DC market going forward.
TPR has published “Perceptions of the Pensions Regulator – A report on the 2016-17 Perceptions Tracker survey”. The main objective of the survey was to understand how effectively TPR is perceived to be fulfilling its statutory objectives and related functions from the perspective of TPR’s principal audiences. It also gathered findings on the awareness those surveyed had of pension scams, with a quarter of the survey’s respondents reporting having experienced scam attempts.
A company and its managing director have admitted deliberately avoiding giving their staff pensions, pleading guilty to a total of 16 offences of wilfully failing to comply with the law on workplace pensions. This was the first time that TPR had launched prosecutions for such offences.
TPR had announced in September 2017 that it was prosecuting a firm and its managing director for deliberately not putting staff into a workplace pension. The firm was accused of failing to comply with the law on automatic enrolment (an offence under section 45 of the Pensions Act 2008), and the managing director was accused of either consenting or conniving in the firm’s offence, or allowing the offence to be committed by neglect (an offence under section 46 of the same Act).
The case was adjourned for sentencing at the Brighton Magistrates’ Court in December 2017. TPR is separately pursuing the company for £14,400 in civil fines imposed for non-compliance.
TPR has published a new checklist to help those completing the 2017-2018 scheme return in respect of DB and hybrid (mixed benefit) occupational pension schemes.
The checklist highlights new questions being asked in this year’s scheme return, requiring the above schemes to report on their scheme data. Specifically, DB and hybrid schemes will be asked:
- when they last reviewed their common and scheme-specific (conditional) data, and
- what percentage of this data is complete and accurate.
TPR are seeking answers to the above so as to measure the quality of record keeping in the pensions industry and to track the progress of individual schemes. It will also use this information as part of its drive to improve the quality of record keeping in pension schemes.
TPR’s requirements relating to record keeping are nothing new (see our Alert) and, although TPR will not take enforcement action on the basis of scores alone, “if we have concerns that our standards are not being met we might engage with individual schemes. This may result in us taking action where trustees fail to demonstrate they are taking appropriate steps to improve their records”.
Further guidance is available in TPR’s Quick guide to measuring your data.