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
- Finance Act 2018 receives Royal Assent
- Legislation published
- DB White Paper published
- Master Trust regulations consultation response
- TPR and the FCA issue call for input on regulating the pensions sector
- PPF publishes Strategic Plan 2018-2021
- TPR publishes blogs
- Mrs Y v PCSPS (TPO)
The Finance Act 2018 received Royal Assent on 15 March 2018. The Act includes:
- new powers for HMRC to register and deregister certain pension schemes “to tackle scams and fraudulent schemes”
- powers for HMRC to refuse to register master trusts not authorised by TPR, or occupational pension schemes whose sponsoring employer has been a dormant company for a continuous period of one month.
In relation to master trusts, changes to the Finance Act 2004 allow HMRC to align the pension scheme tax registration process with TPR’s authorisation and supervision regime for master trusts under the Pensions Schemes Act 2017.
The measures come into force on 6 April 2018.
The following pieces of legislation were made on 14 March 2018, and will come into force on 6 April 2018:
- The Pension Schemes (Application of UK Provisions to Relevant Non-UK Schemes) (Amendment) Regulations 2018 amend the rules relating to the UK tax treatment of foreign pension schemes. Following the introduction of legislation in the Finance Act 2017 to implement the overseas transfer charge (from 9 March 2017) and revised member payment provisions (from 6 April 2017), the Government consulted on changes to the payment rules for relevant non-UK schemes (RNUKS). The regulations are designed to ensure that the Finance Act 2017 provisions operate as intended, rather than to change policy. The changes were needed to determine how funds benefiting from UK tax relief are calculated, and how payments out of those funds reduce the amount that is subject to UK tax charges.
- The Relevant Overseas Schemes (Transfer of Sums and Assets) Regulations 2018 make provision in relation to the transfer of sums and assets by relevant overseas schemes (to another relevant overseas scheme or registered pension scheme), and prescribe transfers which avoid an unauthorised payments charge. The regulations also stem from the Finance Act 2017.
- The National Employment Savings Trust (Amendment) Order 2018 makes changes to the NEST pension scheme.
The Government’s long-awaited White Paper on DB private sector pensions, which follows on from its 2017 Green Paper, was published today, 19 March 2018.
Among other things, the paper on ”Protecting defined benefit pension schemes” sets out Government plans to:
- protect private pensions through a stronger Pensions Regulator, with enhanced enforcement and information gathering powers
- clarify scheme funding principles, and strengthen TPR’s ability to enforce standards through a revised code of practice and a new requirement for DB schemes to appoint a Chair who will be required to report to TPR through a Chair’s Statement, and
- create the right conditions for, and promote the benefits of, consolidation.
The Government is proposing a phased approach to the introduction of the new measures. Early action will be taken in some areas (for example, where work is already underway or where new primary legislation is not needed), and “further considered work” with TPR, the PPF, the pensions industry and other stakeholders in other areas. We can therefore expect to see a range of consultations on new measures for DB schemes over the coming months.
Aspects of DB pension provision in relation to which the Government has confirmed there will be no substantive changes for now include indexation, the length of the valuation cycle, and employer debt.
TPR has issued a press release welcoming the new proposals, noting that the measures will support TPR’s ongoing drive, under its “TPR Future” initiative, to be “clearer, quicker and tougher in the way it regulates”.
Please see our forthcoming Alert for further detail.
The DWP has today, 19 March 2018, published its response to consultation on the Master Trust Authorisation and Supervision Regime.
The document gives a summary of the feedback received on the draft Occupational Pension Schemes (Master Trusts) Regulations 2018, the regulations that will implement the authorisation and supervision regime introduced under the Pension Schemes Act 2017.
The Government intends to lay the draft regulations in Parliament in time for them to come into force on 1 October 2018.
We understand that TPR will shortly be consulting on an associated Code of Practice.
Please see our forthcoming Alert for further detail.
On 19 March 2018, the TPR and the FCA published a joint call for input on “Regulating the pensions and retirement income sector: our strategic approach”.
The strategic approach will set out how the FCA and TPR will work together to tackle the key risks facing the pensions sector over the next 5-10 years. The call asks for input from stakeholders and other interested parties to help the FCA and TPR understand “the biggest current and potential risks”, and how they should look to tackle these.
Comments should be submitted by 19 June 2018. The FCA aims to publish information on the final strategic approach in Autumn 2018.
The PPF has published its Strategic Plan 2018-2021, which sets out the organisation’s vision, and how it intends to meet its strategic objectives, which focus on funding, customer service and risk management, over the next three years.
TPR has published several blogs over the last week:
- on 12 March 2018, it published a blog by Fred Berry, Lead Investment Consultant, on pension funds and illiquidity, which examines why pension trustees might wish to gain exposure to long-term, patient, assets and the barriers they may face in doing so
- on 14 March 2018, Policy Manager Catherine Cunningham published “Why DB pensions matter”, which considers key findings from TPR’s latest DB landscape report
- finally on 15 March 2018 Mike Broomfield, Head of Intelligence, looked at the developments in the Financial Guidance and Claims Bill, and recent High Court victories, in relation to action against pension scams (“Swift ban on pension calls will leave fraudsters in the cold”).
The Pensions Ombudsman has upheld a member’s complaint in a case where delays led to a transfer to an overseas scheme no longer being possible.
For further information please see our case report.