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
- HMRC publishes pension schemes newsletter on Scottish rate of Income Tax
- IFoA warns on climate change financial risks
- PPF makes third levy triennium webinars available online
- TPR publishes annual funding statement for DB scheme valuations
- TPR names employers fined for automatic enrolment breaches
- Start-ups alerted to instant pensions duties
- Andrew Warwick-Thompson to leave TPR
On 12 May 2017, HMRC published a pension schemes newsletter covering the Scottish rate of Income Tax and its effect on the administration of pension schemes.
The newsletter gives an update from HMRC which, from January 2018, will tell pension scheme administrators (trustees) operating relief at source pension schemes their individual scheme members’ residency tax status.
The newsletter also provides guidance on using the “Secure Data Exchange Service” (SDES) – HMRC’s new electronic service for the submission of the annual return of individual information. Pension scheme administrators who currently use HMRC’s Secure Electronic Transfer (SET) will be automatically migrated to the new SDES from August 2017. Those who do not use SET will need to enrol onto SDES by January 2018. HMRC has said that it will provide further information on this in due course.
On 12 May 2017, the Institute and Faculty of Actuaries (“IFoA”) issued a Risk Alert to raise awareness around the financial risks posed by climate change. The IFoA is asking that all actuaries, whichever field they work in, consider how the implications of climate change affect their work, actions and decision making.
The IFoA has also published a more detailed guide for actuaries working in the pensions sector. “Resource and Environment Issues: A Practical Guide for Pensions Actuaries” explores the financial implications and impact of a range of issues including climate change, energy, pollution and resource shortages on pension scheme funding. The guide aims to “shine a light on environmental issues which may be less visible and less well understood than the usual ones considered by pensions actuaries when advising clients”.
In support of its consultation on the proposed changes to the levy rules for the triennium starting 2018/19, PPF, together with Experian representatives, participated in a number of live webinar broadcasts, providing opportunities for schemes, sponsors, and professional advisers to hear more about the proposals in the consultation, and to submit questions. Links to the webinars, covering the measurement of insolvency risk, risk reduction, and the issue of small schemes, were published on 10 May 2017.
The consultation has now closed, and Sackers’ response can be viewed here.
TPR published its annual funding statement today (15 May 2017) for trustees and employers of DB schemes.
The annual funding statement is primarily aimed at schemes undertaking valuations with effective dates in the period 22 September 2016 to 21 September 2017 (“2017 valuations”), but is relevant to all trustees and sponsoring employers of DB schemes.
The funding statement aims to highlight some of the key issues facing schemes with 2017 valuations. TPR’s analysis also identifies groups of schemes which have been affected by current and recent market conditions. Among other things, TPR stresses the need for trustees to have in place a contingency plan which details the “actions they would need to take to correct the scheme’s position in the event of a downside risk materialising”. As TPR notes, “this is particularly important for trustees who decide to continue to run significant risk levels. This contingency plan needs to be agreed with the employer in advance and should be legally enforceable.”
TPR advises that “schemes should read the statement alongside TPR’s code of practice on scheme funding and supporting guidance on integrated risk management, DB investment, and assessing and monitoring the employer covenant. TPR expects schemes with 2017 valuations to fully incorporate the principles contained in its DB code into their valuations.”
For more information, please see our forthcoming Alert.
On 11 May 2017, TPR published its latest quarterly automatic enrolment compliance and enforcement bulletin.
For the first time as part of the bulletin TPR has published the details of every organisation that it has secured a court order against after the employers failed to meet their automatic enrolment responsibilities. In each case the employer had been issued with an escalating penalty notice (“EPN”) by TPR for non-compliance but had failed to pay it. Separately TPR has published the details of every employer that continues to ignore its automatic enrolment responsibilities despite having been issued with, and paid, an EPN.
TPR notes that it may consider taking additional enforcement action against those employers who remain non-compliant with their automatic enrolment duties, including prosecution in appropriate cases in accordance with its published prosecution policy. Updated lists will be published each quarter, alongside the quarterly bulletin.
The quarterly bulletin also reveals a large increase in the number of inspections of business premises carried out by TPR staff to check for compliance. A total of 224 inspections were carried out in the quarter, compared to the 57 in the whole of 2016. TPR issued more than 14,500 fixed penalty notices of £400 for automatic enrolment non-compliance to employers, and 2,517 EPNs, in the first three months of 2017.
TPR has reminded new businesses which start up from October 2017 that they will have “instant pension duties”. The alert was issued as the current schedule for employers to meet their automatic enrolment duties comes to an end; all businesses which existed before April 2012 have now passed their staging date.
From October 2017, new businesses will need to put pension plans in place alongside all the usual tasks associated with setting up a business. TPR will write to employers to tell them what they need to do and by when, and has also launched a new online suite of information and tools for new businesses and their advisers.
On 11 May 2017, TPR confirmed that Andrew Warwick-Thompson will leave his post of Executive Director for Regulatory Policy at TPR, to join the Local Government Pensions Scheme (LGPS) Central as chief executive in July 2017.
Warwick-Thompson joined the board of TPR in 2013. TPR has said it will announce a successor in due course.