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

Queen’s Speech confirms new Pensions Bill in the pipeline

The Queen’s Speech was delivered on 18 May 2016. The speech referenced the introduction of Lifetime ISAs, first announced in the Budget 2016, via a “Lifetime Savings Bill”.

The background briefing notes published alongside the speech confirm that there is a new Pensions Bill on the horizon. In brief, the aims of the new Pensions Bill will be to provide “essential protections” for people in master trusts, remove barriers for consumers who want to access their pension savings flexibly, and restructure the delivery of financial guidance.

The main elements are expected to be as follows:

  • master trusts will have to demonstrate that they meet strict new criteria before entering the market
  • TPR will be given greater powers to authorise and supervise master trusts, and take action “when necessary”
  • early exit fees charged by trust-based occupational pension schemes will be capped, and “unreasonable barriers” to consumers wishing to access pension freedoms will be removed
  • a new pensions guidance body will be created, bringing together TPAS, Pension Wise and the pensions services offered by MAS
  • a new money guidance body will replace MAS and will be charged with identifying gaps in the financial guidance market to ensure consumers can access “high quality debt and money guidance”

TPR welcomed the announcement of a new Pensions Bill. Lesley Titcomb Chief Executive at TPR said: “We have voiced concerns for some time about the need for stronger legislative standards for master trusts and have worked with government and other regulators to improve levels of protection for members.[…] We look forward to working with government over the coming months to develop the strategic application of these proposed new powers to ensure master trusts are strong, durable and well placed to deliver good member outcomes.”

There is as yet no timescale for the expected delivery of the new Bill.

DWP updates guidance on how to increase state pension

The DWP published an updated version of its guidance on topping up state pensions on 18 May 2016. The guidance provides information for men born between 6 April 1945 and 5 April 1950 and women born between 6 April 1950 and 5 April 1952.

HMRC publishes Pension Schemes Newsletter 78

HMRC published Pension Schemes Newsletter 78 on 17 May 2016. Among other things, it includes information on double taxation and HMRC’s new service for requesting certificates of residence in relation to foreign income, serious ill-health lump sums, the tapered annual allowance, lifetime allowance protections, UFPLS payment dates, and an update on reporting non-taxable death benefits through HMRC’s Real Time Information reporting system.

In particular, the Newsletter confirms that:

  • the pro forma letters for applying for the new fixed protection 2016 (FP16) or individual protection 2016 (IP16) have been updated. Amongst other small changes, they now ask members to confirm that they have not had a protection cessation event since 6 April 2016 that would mean they are not entitled to apply for FP16, and to notify HMRC if they have become subject to a relevant pension debit, providing the required details
  • members who have applied for IP16 or FP16 using the interim application process but who have not followed this up with an online application have “not lost their protection, their pension savings will continue to be protected and there will be no tax consequences”. However, from August 2016 onwards, only permanent reference numbers will be recognised by HMRC
  • serious ill-health lump sums will be able to be taken in an additional circumstance (as announced in the Budget 2016), allowing those who have already accessed part of their benefits to be able to take the lump sum from their remaining uncrystallised funds. This will come into force the day after the current Finance Bill completes its Parliamentary process
  • individuals can only use mandatory Scheme Pays where their annual allowance charge for the tax year exceeds £2,000 and their pension input amount for the registered pension scheme for the tax year exceeds the general untapered annual allowance (currently £40,000).

HMRC issues latest “Countdown bulletin” on the abolition of DB contracting-out

On 23 May 2016, HMRC published issue 17 of its contracting out Countdown Bulletin, which provides further guidance for pension scheme administrators in relation to the end of contracting-out as of 6 April 2016.

Amongst other things, the bulletin gives information on the GMP Checker service, GMP increments, the Scheme Reconciliation Service and scheme cessation.

PLSA launches guidance on the LGPS

On 18 May 2016, the PLSA launched a new series of guides in relation to the LGPS, promoting the first two – “An introduction to the LGPS for scheduled bodies and “Navigating entry into the LGPS: for local government contractorsat their Local Authority Conference.

The guides are designed to support local authority funds and help employers understand what they need to know before joining the LGPS, helping them to “obtain a full appreciation of the[ir] obligations and any associated risks”.

PLSA releases ESG “Made Simple” Guide

The PLSA also published a “Made Simple” guide on Environmental, Social and Corporate Governance (ESG) at the Local Authority Conference on 18 May 2016.

The guide features simple explanations and practical help for pension schemes considering integrating ESG factors into their investment decision-making framework.

Commenting on the launch of the new Made Simple Guide, Lesley Williams, Chair of the PLSA, said: “There is a growing body of evidence showing that integrating environmental, social and governance considerations into investment decisions can have a positive impact on risk-adjusted returns, particularly over the long-term time horizons applicable to pension funds’ investments. […] this isn’t about going greener but about achieving better outcomes.”

SPP publishes Brexit White Paper

On 17 May 2016, the SPP published a White Paper considering whether Brexit would benefit or be detrimental to UK pensions.

The SPP states that the intention of the paper is neither to lobby for a Remain nor Leave vote, but to stimulate debate by presenting what, in the SPP’s view, are the main consequences for pensions in the event of either decision.

Vose (Pensions Ombudsman, 9 March 2016)

The PO partially upheld a member’s complaint, finding that there had been maladministration in providing incorrect information to the member about the level of his benefits.

Please see our case report for further details.