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
- Pension Schemes Bill 2019-20
- The Occupational and Personal Pension Schemes (General Levy) review 2019
- FCA announces future work on climate change and green finance
- HMRC publishes guidance on scheme pays
- PLSA launches Retirement Living Standards
The long-awaited Pension Schemes Bill (“the Bill”) has been published. As expected, several clauses and schedules are devoted to laying the groundwork for “collective money purchase benefits” and pensions dashboards. TPR’s new powers, enabling it to be “clearer, quicker, and tougher”, are also a significant feature.
The Bill will introduce:
- a framework for “collective money purchase schemes” (also known as collective DC, or “CDC”)
- provisions to enable pensions dashboards
- new criminal offences for failure to comply with a contribution notice, avoidance of an employer debt, and conduct risking accrued scheme benefits
- a new power for TPR to impose a civil penalty of up to £1 million in respect of any of the above, and also where a person knowingly or recklessly provides it (or the trustees in certain circumstances) with false or misleading information
- a new requirement for trustees of occupational DB schemes to determine (with the agreement of the employer) a strategy for ensuring that pensions and other benefits under the scheme can be provided over the long term (a “funding and investment strategy”), and
- restrictions on the right to a statutory transfer, unless prescribed conditions are met.
For further details, please see our Alert
The general levy on occupational and personal pension schemes recovers the funding provided by the DWP in respect of the core activities of TPR, the activities of TPO, and part of the activities of MAPS.
On 18 October 2019, the DWP published a consultation on the options to raise the levy rates from April 2020. The consultation closes at midday on 15 November 2019.
On 16 October 2019, the FCA published a feedback statement setting out its proposals to improve climate change disclosures by firms and information to consumers on green financial products and services.
Key actions the FCA intends to take include:
- consulting on new rules to improve climate-related disclosures by certain firms and clarifying existing obligations
- finalising rule changes requiring IGCs to oversee and report on firms’ ESG and stewardship policies, as well as separate rule changes to facilitate investment in patient capital opportunities
- publishing a feedback statement in response to a joint discussion paper with the FRC on stewardship, setting out actions to address the most significant barriers to effective stewardship
- clarifying its expectations around consumers’ access to green financial products and services, and taking appropriate action to prevent consumers being misled.
The FCA will also continue to contribute to several collaborative initiatives, including the Government led cross-regulator taskforce on disclosures, as well as the Climate Financial Risk Forum which it established alongside the PRA earlier this year.
The annual allowance (“AA”) limits the amount of pension savings an individual can make with the benefit of tax relief each year. A tax charge generally arises when the individual’s AA is exceeded.
HMRC has issued guidance to help individuals to work out when their pension scheme must pay some or all of any AA tax charge by reducing their scheme benefits (known as “mandatory scheme pays”), and when the scheme can choose to do so (known as “voluntary scheme pays”).
On 17 October 2019, the PLSA launched its “Retirement Living Standards”.
Pitched at three levels (minimum, moderate and comfortable) the standards “have been designed to fill the gaps in current approaches” and to act as “a practical and meaningful starting point on a saver’s engagement journey”.
Like the 5-a-day healthy eating initiative, the PLSA’s ambition is for the Retirement Living Standards to become a widely adopted industry standard. For example, the PLSA envisages schemes using them in general member information, in annual benefit statements, or “to develop personalised targets for their members’ pension planning”. The PLSA wants to see schemes representing 90% of active savers adopt the standards by 2025.
As well as helping savers understand what their retirement will look like, the PLSA believes the standards will help the pensions industry by:
- providing “a set of robust standards, based on independent research with the UK public, for use across scheme communications and tools”
- equipping “schemes to further encourage savers to engage with their pension”.
- giving “savers concrete information about costs in retirement to give them more confidence in planning to achieve their aspirations”.
The PLSA will seek to ensure the pensions sector and the Government adopt the Retirement Living Standards “to help many more people plan effectively for retirement”. It is also working with MAPS to include Retirement Living Standards in their tools, such as the pension calculator.