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

Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations

In July 2015 the DWP laid the Occupational Pension Schemes (Schemes that were Contracted-out) Regulations 2015 – “the 2015 Regulations”. However, after publication, procedural errors were identified.

The 2015 Regulations were therefore revoked and replaced (on 16 September 2015) with The Occupational Pension Schemes (Schemes that were Contracted-out) (No.2) Regulations 2015 which remove the provisions that need to be subject to a different Parliamentary procedure. At the same time, the government response was revised and replaced in order to reflect the changes and explain the error.

The remaining provisions will be dealt with in a future set of regulations which will be subject to the correct “affirmative procedure”, with the intention that this will be debated and made before the end of 2015.

BIS factsheets: Restrictions on Exit Payments in Public Sector Employment

BIS has published summary and detailed factsheets on the Enterprise Bill.

The factsheets cover the proposed Restrictions on Exit Payments in Public Sector Employment (for further detail see our 7 Days of 3 August 2015, and below, on the response to HMT’s consultation).

DWP campaign to explain State Pension reform

On 19 September 2015, the DWP launched a major new campaign aimed at preparing people for the forthcoming State Pension reforms in April 2016.

Pensions Minister Baroness Altmann unveiled the new communications drive. Under the tagline “Your state pension is changing”, the campaign aims to broaden the public’s understanding of how the new State Pension will work and how people can find out how it affects them.

People can use the State Pension calculator to work out when they will reach State Pension age or Pension Credit qualifying age. Those aged 55 or over can also now get a personalised State Pension statement based on their work history and National Insurance contributions to date. The statements now include information on deductions applied to those who have contracted-out of the State Pension.

As part of the drive to help explain State Pension reform, the DWP published information entitled “8 things you need to know about pensions” on 19 September 2015. This contains links to the State Pension tools, and information on Pension Wise.

DWP publishes “Workplace pensions: Update of analysis on Automatic Enrolment”

On 17 September, the DWP published statistics on automatic enrolment.

The release “estimates the overall impact on pension saving and the number of workers affected by automatic enrolment. It also provides analysis on the characteristics of different groups of workers (such as eligibility and earnings)”.

Statistics quoted include the DWP’s estimates that, as a result of automatic enrolment, nine million workers will be “newly saving or saving more” by 2018, and that there will be £14-16 billion extra saving per year in workplace pensions by 2019/20.

Economic Secretary to the Treasury announces DWP responsibility for Pension Wise

On 16 September 2015, Harriett Baldwin, Economic Secretary to the Treasury announced at an evidence session for the Work and Pensions Select Committee that responsibility for delivery of Pension Wise would move from HMT to the DWP by the end of the financial year.

The move to the DWP, which is in line with an earlier recommendation of the Committee, will not mean a change to the service itself or to its delivery partners, the Citizens Advice Bureau and TPAS.

It was also announced that the government will be making core data, including website visits and number of appointments, publicly available and update it regularly.

Extension of EMIR central clearing exemption published

As covered in our 7 Days of 8 June 2015, the European Commission adopted a Delegated Regulation on 5 June 2015 extending the current EMIR exemption from central clearing for pension schemes for a further two years until August 2017. The exemption applies to all over the counter derivative transactions that are “objectively measurable as reducing investment risks directly relating to the financial solvency of pension schemes”.

The regulation was published in the Official Journal of the EU (OJ) on 15 September 2015, and entered into force on 16 September 2015.

FCA publishes analysis and findings on the pension freedoms data collection exercise

On 16 September 2015, the FCA published their report into the findings and analysis of their data collection exercise, which sought information across a number of areas of the pensions and retirement income market.

The FCA sent a request for data to all pension and retirement income providers in July 2015, seeking information across the following areas of the market: consumer access to pension freedoms; financial advice requirements and the treatment of insistent clients; the pension transfer procedure; and exit charges.

The data was collected to provide input into the FCA’s ongoing supervisory and policy work, and to assist in the FCA providing input into HMT’s consultation on pension transfers and barriers faced by customers seeking to access the new flexibilities.

Findings included:

  • the average pension transfer time is 16 days
  • 84% of consumers aged 55 or over had not experienced any exit charges
  • there were 12,418 annuity sales in the fi­rst three months of the new flexible regime, compared with 89,896 for the same period in 2013.

The FCA plans to continue to track choices made by individuals through a quarterly survey, as well as “more generally developing pension policy, monitoring market developments, and supervising firms that are active in this market.”

Exchange of letters confirming FCA support on the implementation of the pension flexibility reforms

On 16 September 2015 (following the publication of the FCA report mentioned above), the Acting CEO of the FCA, Tracey McDermott, wrote to the Economic Secretary to the Treasury, Harriett Baldwin MP, setting out the FCA’s findings.

In summary, the findings so far suggest that “the great majority of funds can be used to access the full range of options provided by the government’s reforms, and where new contracts are required, most do not carry an exit charge”. However, for a minority, this is not the case.

HMRC: updated list of recognised overseas pension schemes published

HMRC published an updated Recognised Overseas Pension Schemes (ROPS) list on 15 September 2015. In this latest update, thirteen new schemes have been included, with five Australian schemes now being listed as having “told HMRC they meet the conditions to be a ROPS”.

For further background detail please see our Alert.

HMT publishes summary of responses to consultation on public sector exit charges

HMT has published a document summarising all the responses to the consultation on public sector exit charges, which ran from 31 July to 27 August 2015.

The consultation sought views on placing a £95,000 cap on the total value of payments made to an individual in relation to their exit from public sector employment. Exit payments were defined to include employer pension contributions and early access to unreduced pensions.

The response document states in its summary that “Over 4,000 responses to the consultation were received. While a significant number were not in favour of a cap given other reforms to public sector terms and conditions, or had objections to the cap applying to the organisation they worked for, few representations set out a different proposition.”

Therefore having considered the responses to the consultation, the government proposes to continue to legislate to introduce a cap on exit payments as part of the Enterprise Bill. The government states that detailed technical issues raised in responses connected with the implementation of the cap “will inform [its] thinking as it develops the legislation to deliver the cap”.

PPI publishes Briefing Note 75 – who is ineligible for automatic enrolment?

The PPI has published a new Briefing Note setting out a review into ineligibility for automatic enrolment, including the results of a round table discussion between the PPI and Age UK.

TPR issues statement for insolvency practitioners on trustee appointments and statutory notices

TPR has issued a statement for insolvency practitioners (IPs) on points of relevance to them. The statement explains when TPR may appoint a trustee to an occupational pension scheme where the employer has entered insolvency, that this power is discretionary, and that it is dependent upon the scheme’s circumstances. The statement suggests considerations for IPs to bear in mind in relation to trustees of insolvent employers’ schemes.

The statement also clarifies IPs’ notification duties in relation to TPR.

TPR points trustees to DC pension scheme charges guidance

As part of their DC governance standards campaign (see our 7 Days of 24 August 2015), TPR has contacted trustees in relation to the new requirements for DC pension scheme charges, pointing them in the direction of guidance on their website, including a new video and TPR’s new “essential guide”.

TPR publishes survey on Flexible Pension Access

TPR has published (September 2015) its report of the findings of the 2015 research survey on flexible pension access, carried out by OMB research.

The research deals mainly with exit fees and charges and the transfer process in occupational DC schemes. Uncrystallised funds pension lump sum and tax free lump sum withdrawal were the options most commonly available to scheme members, with (respectively) 88% and 70% of schemes offering these facilities. The survey also found that a large majority of schemes (89%) did not impose any costs or charges to members when exercising an exit option.

Owen Smith appointed Shadow Work and Pensions Secretary

New Labour Party Leader Jeremy Corbyn has named MP for Pontypridd Owen Smith as Shadow Work and Pensions Secretary.

Buckinghamshire v Barnardo’s (28 July 2015)

In this case Warren J considered whether the trustees of the Barnardo Staff Pension Scheme had power under the Scheme rules to select the index by reference to which increases in pensions in payment and to deferred pensions would be calculated.

For more detail, please see our case report.