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

Registered Pension Schemes (Provision of Information) (Amendment) Regulations 2017

On 12 January 2017, the Registered Pension Schemes (Provision of Information) (Amendment) Regulations 2017 were laid before Parliament. They amend the Registered Pension Schemes (Provision of Information) Regulations 2006 in relation to lump sum death benefits made by registered pension schemes. The regulations had been published in draft for consultation in November 2016.

When a lump sum death benefit is paid to a trust, the regulations require scheme administrators to provide information to the trustee of the amount of lump sum death benefit and tax paid by the scheme administrator. The regulations also require trustees to pass on the same information if they then use the lump sum death benefit to make a payment to an individual beneficiary of the trust. This aims to ensure the trust beneficiary has the information they need in order to claim a refund of the excess tax paid by the scheme administrator over and above the tax at their marginal rate.

The regulations also make minor changes to the existing information requirements relating to the annual allowance taper introduced on 6 April 2016.

The changes come into force on 6 February 2017 and will apply to payments made since 6 April 2016.

FRC publishes report on corporate governance and stewardship 2016

FRC published its annual report, Developments in Corporate Governance and Stewardship 2016, on 11 January 2017.

The report states that its four purposes are to:

  • give an assessment of corporate governance and stewardship in the UK
  • report on the quality of compliance with, and reporting against, the UK Corporate Governance and Stewardship Codes
  • set out the FRC’s findings on the quality of engagement between companies and shareholders, and
  • to indicate to the market where the FRC would like to see changes in corporate governance behaviour or reporting.

Given the importance of pension funds as institutional investors, the report picks up on a number of recent initiatives for pensions in this area. These include asset pooling in the LGPS, the emphasis placed on stewardship and engagement in TPR’s new DC Code, and the monthly questions for fund managers published by the PLSA.

The report finds that, while compliance with the principles of the UK Corporate Governance Code remains high, some boards “still need to do more than pay lip service to the needs of their shareholders and other stakeholders”.

FSCS levy 2017/18, and increases to the 2016/17 levy

On 16 January 2017, the FSCS published its Plan and Budget for 2017/18. The document provides the Scheme’s expected management costs and initial forecasts of the levies financial services firms will pay next year.

Overall, the FSCS expects the levy to reduce to £378m (down from £401m in 2016/17). However, it forecasts materially higher costs in the life and pensions sector. In particular, the FSCS expects the rising trend in complex claims in the life and pension intermediation sector to continue. For example, the number of claims in relation to advice about transferring from occupational pension schemes into SIPPs is forecast to increase by 67%. Therefore, the FSCS intends to levy £171m, “exceeding the annual limit for that class and triggering the contribution from all levy payers”. The FSCS notes that this is the first it has triggered a cross subsidy.

The final levy will be confirmed in April.

The FSCS also announced that supplementary levies would be raised on the life and pension intermediation sector for the year 2016/17 (an additional £36m on the annual levy of £90m). This supplement has arisen because of “the high numbers of SIPP-related claims [the FSCS is] continuing to receive”, and the need to cross-subsidise claims relating to “advice to switch pension funds into high risk investments”.

Invoices are due to be issued to firms around the end of January 2017.

HMRC publishes Issue 22 of Countdown Bulletin

On 9 January 2017, HMRC published issue 22 of its Countdown Bulletin, the latest in its series of updates to provide guidance and information to pension scheme administrators in relation to the abolition of DB contracting-out on 5 April 2016.

Bulletin 22 gives information about the timetable for reconciling records with HMRC and the benefits of doing so. It also gives information on the Scheme Reconciliation Service, and answers questions on the “GMP checker” service.

ICSA and IA propose governance guidance on engagement with stakeholders

On 13 January 2017, the ICSA and the Investment Association announced that they are launching a joint project to assist boards in improving their engagement with, and understanding of the interests of, their stakeholders.

The two bodies will identify existing best practice and produce guidance which will identify different approaches to stakeholder engagement for companies to consider and summarise the issues to be addressed and the practical steps to be taken. The proposals, which have been welcomed by the FRC, will include the different approaches identified in BEIS’s green paper on corporate governance reform.

The guidance will include processes by which boards can receive the views of their key stakeholders. It is due to be published in the second quarter of 2017.

Mr E (PO-13558, re new calculation of expired CETV)

The PO dismissed the case of a member who had complained about the reduction of the CETV offered to him following the expiry of the guarantee period.

Please see our case report for further details.

Mrs D (PO-10901, re provision of information, and religious beliefs)

The PO dismissed the case of a member who had complained that her DB pension scheme had not provided her with sufficient information on its investments for her to be able to assess whether membership of the scheme would be contrary to her religious beliefs.

Please see our case report for further details.