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
- Public Service Pensions and Judicial Offices Bill
- DWP update on DB consolidation via Superfunds
- Government consults on Finance Bill proposals
- HMRC Countdown Bulletin 55
- PASA launch guidance on eAdmin and technology opportunities
- PLSA report on implications of potential changes to pensions tax relief
- PHSO reports findings on the DWP’s communication of state pension changes
- TPO and Pension Protection Fund Ombudsman annual report and accounts 2020 to 2021
- TPR annual report and accounts 2020 to 2021
- TPR blog on diversity
- WPC write to TPR and PPF regarding compensation
- PPF v Hughes (Court of Appeal)
On 19 July 2021, the first reading of the Public Service Pensions and Judicial Offices Bill took place in the House of Lords. The second reading scheduled for 7 September.
The Bill is designed to ensure equal treatment of public service pension schemes members in order to remedy the discrimination identified in the McCloud judgment. Following consultation, the Bill includes provision to allow public service scheme members a “deferred choice underpin” in deciding whether to take their benefits from the legacy or reformed schemes (see 7 Days). The Bill also seeks to reform the pension arrangements and increase the mandatory retirement age for judicial office holders from 70 to 75 (see 7 Days).
Regulations giving effect to these changes will be made after the Bill has completed its passage through Parliament.
On 15 July 2021, the DWP published its annual report and accounts (2020-21). It includes updates on all its current pension projects, including small pots, simpler annual benefit statements, and the pensions dashboards. In relation to DB Superfunds, it notes that the DWP aims to “set out [its] vision for the future regulation of Superfunds in autumn/winter 2021” and that the DWP is “continuing to develop the future regulatory regime and will look to legislate as soon as parliamentary time allows”.
On 20 July 2021, HMRC and HMT jointly launched a consultation on draft legislation to be included in the Finance Bill 2021-22.
In relation to pensions tax, it proposes:
- extending the reporting and payment deadlines for scheme pays. This is intended to resolve a technical issue that will arise within the pension tax framework as a result of the Government’s planned remedy for addressing the McCloud case (see above). The Government also intends to make further technical updates to pension tax rules as necessary to remove any other anomalies as a result of the remedy.
- increasing normal minimum pension age (“NMPA”). In brief, the draft legislation will increase NMPA from 55 to 57 in April 2028. This is the age at which most members of registered pension schemes can draw benefits without incurring unauthorised payment charges. Members of uniformed public service pension schemes and those with unqualified rights to take their pension below age 57 will be protected from these changes. After considering consultation responses, individuals will be able to keep their protected pension age if they transfer their pension. (See our Alert for further details.)
On 26 July 2021, HMRC published Countdown Bulletin 55 which has updates on:
- the closure of Scheme Cessation and Scheme Reconciliation eRooms
- final data cuts for Pension Schemes
- how to raise queries with HMRC.
On 21 July 2021, PASA announced the launch of “The Journey to Full eAdministration Guidance: People and Technology Working Together”. The guidance “aims to support administrators, trustees, pension managers and sponsors to benchmark their own arrangements and set objectives and plan for investment in new technology opportunities”. PASA sets out specific goals including having better data quality that is appropriately stored, upgrading or replacing systems and processes, having a user interface and improving reporting.
On 20 July 2021, the PPI and PLSA published a report, “Pension Tax Reforms: implications for Savers”, which explores how a selection of workers with different levels of income and in different types of workplace pension scheme would be affected by four potential reform options including flat rate relief set at 20%, 25% and 30%, and a move from EET (exempt, exempt, taxed) to TEE (taxed, exempt, exempt), under which pension contributions would be taxed at a person’s marginal rate of income tax but investment returns and pension income would be exempt.
The Parliamentary and Health Service Ombudsman (“PHSO”) has published a report which highlighted “failings” in the way the DWP communicated changes to women’s state pension age. The next step is for the Ombudsman to consider whether this maladministration led to any injustice and, if so, the appropriate redress.
On 22 July 2021, TPO and the PPF Ombudsman published their annual report and accounts 2020 to 2021.
On 21 July 2021, TPR published its annual report and accounts 2020 to 2021.
Liz Hickey, TPR Director of Communications, outlines what the strategy could achieve for savers and staff by the year 2025 and concluded that “TPR is thriving as a more diverse and inclusive employer and the pensions industry is doing the same. The industry of 2025 better reflects the savers who trust their retirement pots within it… This vision for the future reminds us a more diverse and inclusive pensions industry isn’t just the right thing to do. It underpins good governance and decision-making, and therefore sits at the very heart of achieving good outcomes for savers.”
WPC Chair Stephen Timms pointed out that many members of pension schemes, which were used as a vehicle for pension fraud, could now be eligible for compensation, but added that there was “uncertainty” around some cases where no independent trustee was appointed. One of the questions Mr Timms asked was: “Compensation from the Fraud Compensation Fund [FCF] can only be paid directly to scheme trustees or managers. Will TPR revisit any decisions not to appoint independent trustees for schemes which may now be eligible for compensation from the FCF?”
We reported last week that the Court of Appeal has found in favour of the PPF’s approach for increasing payments to PPF and FAS members following the 2018 CJEU judgment in the Hampshire case (see 7 Days). See our case summary for further detail.