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

DWP and TPR clarify signposting provisions

The DWP and TPR have issued a joint statement to clarify the signposting provisions for referring matters to TPO and TPAS, following the transfer of the TPAS dispute resolution function to TPO in March 2018.

The statement confirms that all complaints and disputes about occupational and personal pension schemes should go to TPO, while general requests for information and guidance should be directed to TPAS.

While relevant legislation (including the Disclosure Regulations) has yet to be updated to reflect the change, the statement also confirms that “despite the current absence of legislation, there would be no purpose served in considering penalties for schemes referring disputes and complaints to TPO that have not first gone through the scheme’s internal dispute resolution process (IDRP)”.

TPO has also published a signposting template which schemes can use, for example on their website and in communications with members, to inform them of the right to refer complaints to TPO.

HMRC publishes Pension schemes newsletter 103

HMRC has today (24 September 2018) published Pension schemes newsletter 103. It includes articles on:

  • operating PAYE on pension payments
  • HMRC registration for Master Trusts and the interaction with TPR’s authorisation process
  • annual allowance pension savings statements for the tax year 2017/2018, and a reminder that scheme administrators need to issue these by 6 October 2018 to all members who contributed more than the AA in their scheme.

HMRC updates form APSS 106

HMRC has updated its form APSS 106, for use by pension scheme administrators to make an annual claim for recovery of tax deducted by individuals. The form now notes that it should reach HMRC by no later than 5 October following the end of the relevant tax year.

PASA launches eAdmin Group

PASA has announced the launch of its eAdmin Working Group, which has been set up to explore how schemes, trustees, regulators and administration providers can optimise the use of technology to improve overall service.

PASA board director, Girish Menezes, commented: “Technology is transforming the pensions industry. From online retirement quotes to the pensions dashboard, E-Administration can greatly enhance the member experience, reduce administration costs, speed up processes and minimise the risk of errors. However, it is critical that we implement technology in the right way. Ensuring clean data, standardising processes, agreeing common data interfaces and building industrial-strength platforms. PASA set up this working group because there is a need in the industry for clearer standards to help guide people through the process and highlight the key landmarks that must be considered along the way.”

The group, which will be overseen by TPR, is due to publish its initial findings in early 2019.

PPF announces 2019/20 levy estimate and consultation on levy rules

The PPF announced on 19 September 2018 that the levy estimate for 2019/20 will be set at £500 million, down from £550 million in 2018/19.

According to the PPF, last year saw the highest level of claims in PPF history, and further large claims are expected in the near future. However, the PPF notes that its prudent approach to funding has allowed the PPF Board to continue its policy of keeping the levy stable and predictable within each three-year cycle.

The PPF is also consulting on draft levy rules for 2019/20. As the PPF believes that changes introduced for the 2018/19 levy year (as part of the more substantial triennial review of the levy – see our Alert for details) are working well, only minor adjustments are proposed for 2019/20.

The consultation also sets out the PPF’s proposed methodology for levying commercial consolidators. The approach is based on the methodology for calculating a levy for schemes without a substantive sponsor, with adjustments to reflect the specific risks posed by commercial consolidators. The PPF expects its approach to evolve in coming years as the new regulatory framework for commercial consolidators is defined.

Through the consultation the PPF is also:

  • exploring how it can better support schemes to plan for their levy payments
  • reminding schemes with certain types of contingent assets to re-execute and certify their agreements on the new standard forms (which were published in January 2018) in order to be recognised for the 2019/20 levy year.

The consultation closes at 5pm on 25 October 2018, with the final levy determination expected to be published in December.

TPAS Annual Review 2017/18

TPAS published its latest annual review on 18 September 2018.

The review shows that 186,509 pension savers contacted TPAS for help with their pensions in 2017/18, a 121% increase from 2013/14.

Among other things, during 2017/18 TPAS:

  • set up a helpline for British Steel pension scheme members so they could discuss their options or ask for help if they had proceeded with advice they did not fully understand
  • helped people with their retirement options, so that they could know the pros and cons of each option in the context of their specific situation
  • supported people at life events, such as starting a new job, redundancy, divorce or death. TPAS also set up appointments for customers who had contacted them in relation to their divorce, in order to have more productive time with them and follow the meeting up with an output document.

TPR announces new approach to workplace pensions regulation

On 17 September 2018, TPR announced that more workplace pension schemes will come under closer scrutiny from TPR, as part of a significant shift in its approach to protect pension savers. TPR intends to work proactively with more schemes through a new range of interventions, with a view to addressing risks sooner.

These changes result from TPR’s major review of the way it regulates, an update on which has been published in TPR’s Future report 2 – Making workplace pensions work. The changes will include:

  • dedicated, one-to-one supervision for 25 of the biggest DC, DB and public service pension schemes from October 2018, with the approach being rolled out to more than 60 schemes over the next year. This will involve regular and ongoing contact with trustees or managers and, in some cases their sponsoring employers. Schemes will be selected based on a range of criteria, including size, risk and previous interactions with TPR. TPR will build relationships with schemes whose size means they are strategically important, regardless of whether they trigger its traditional risk indicators
  • higher volume supervisory approaches (through calls, emails and letters) to address risks and influence behaviours in a broader group of schemes. This type of intervention will be piloted with approximately 50 DB schemes to assess compliance with the messages in TPR’s 2018 annual DB funding statement, specifically concerning whether schemes are being treated fairly when it comes to dividend payments to shareholders.

TPR notes that hundreds of schemes are expected to experience higher volume supervisory approaches over time to tackle different risks across the pensions landscape.

TPR Chief Executive Lesley Titcomb said: “Schemes across all sectors, whatever their size, can expect the volume and frequency of their interactions with us to increase so that potential risks to pension savers are identified early and put right before it becomes necessary for us to use the full force of our enforcement powers. Our new model is flexible – we will take a systematic approach to set out our expectations and will respond swiftly to emerging risks, taking tough action where necessary to tackle bad behaviour, including by corporate entities.”

TPR publishes annual auto-enrolment report

TPR has published the sixth edition of its annual commentary and analysis report on automatic enrolment, for the year to 31 March 2018.

The report looks at the impact of automatic enrolment and upcoming trends and challenges. Among its findings are that:

  • workplace pension saving continues to rise, with 84% of employees now saving into a workplace pension (up from 77% the previous year)
  • the total amount saved into a pension by eligible staff in 2017 was £90.3 billion (up from £86 billion)
  • 98% of schemes used for automatic enrolment are DC schemes (up from 97%)
  • while the number of compliance notices issued to employers has risen from nearly 34,000 to nearly 61,000, the majority of employers comply when they are reminded of their duties
  • a high level of compliance has been seen so far with the increased minimum DC contribution rates which started in April 2018
  • the majority of employers spend less than two hours a month on their ongoing duties and find them easier than they had expected
  • the cost of business advisers for employers with between one and four staff has fallen from £42 to £18 since the previous survey. Around two thirds of employers do not use external advisers.