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
- Cost Transparency Initiative launches tools to help schemes deliver greater value for savers
- FRC publishes amendments to FRS 102
- FRC sets out transition pathway
- House of Commons library publishes new briefing
- HMRC – working out your reduced (tapered) annual allowance
- PPF supports Dementia Action Week
Finalised templates and tools for institutional investors, such as pension schemes, to use to receive standardised cost and charges information from asset managers, were launched by the Cost Transparency Initiative (CTI) on 21 May 2019. The CTI is an independent group, which was launched in November 2018 with the aim of improving cost transparency for institutional investors. It was tasked with implementing, promoting and encouraging the use of the new cost transparency templates (as proposed by the former Institutional Disclosure Working Group) across the pensions and investment industries.
The new standards comprise templates and guidance for asset managers and other suppliers of services to pension schemes, to enable them to report costs and charges in a standardised format. They have been designed to allow pension scheme trustees to make costs and charges comparisons across their different investment management suppliers and asset classes, making it easier for trustees to scrutinise and challenge costs and performance, and to ensure pension savers are getting the best value for their investments.
The tools cover most types of pension scheme assets and are expected to be adopted by schemes, consultants and asset managers representing around £2 trillion in assets under management. The CTI, which is supported by the PLSA, the Investment Association and LGPS Scheme Advisory Board, expects trustees to engage with their investment management suppliers immediately. It also expects asset managers to be in a position to report against December 2019 and April 2020 year-ends using the new CTI tools.
The FRC issued “amendments to FRS 102 – multi-employer defined benefit plans” on 24 May 2019, following a consultation which closed on 31 March 2019.
The amendments respond to a current financial reporting issue, on where to present the impact of an employer’s transition from DC accounting to DB accounting. The FRC has confirmed that it should be presented in “other comprehensive income”. The transition is required by FRS 102 when sufficient information about a multi-employer DB scheme becomes available for the employer to apply DB accounting for the first time. The amendments do not affect the requirement to recognise the relevant liability (or asset) in relation to the scheme.
The amendments are effective for accounting periods beginning on or after 1 January 2020, with early application permitted.
On 23 May 2019, the FRC published its plan and budget for the coming year, with a commitment to accelerate its transition to the new regulator, the Audit, Reporting and Governance Authority. The work is expected to progress alongside the reform programme in place in relation to the audit market.
Transformation work is already underway, with BEIS currently consulting on 48 of Sir John Kingman’s recommendations for a new “enhanced” regulator, many of which the FRC has a lead role in implementing. The budget includes investment in audit and corporate reporting, supervision, and enforcement. The FRC’s work programme and transition are running in parallel with, and contributing to, other reviews, including the Brydon Review of the quality and effectiveness of audit, and the CMA review into audit competition.
The House of Commons library has published a new research briefing on the “Financial and ethical risks of investments in fossil fuel companies by pension funds”. The report was published ahead of a Westminster Hall debate on the subject, held on 22 May 2019.
HMRC has updated its guidance for individuals on how to work out whether they have a reduced (tapered) annual allowance for a tax year.
The guidance was updated on 22 May 2019, to clarify the types of income that may be included in an individual’s taxable income. The sections on working threshold income, pension savings, and how to calculate the amount of pension savings an individual’s employer has made, have also been updated.
The PPF partnered with Dementia UK, the Alzheimer’s Society, and Croydon Dementia Action Alliance to roll out an ongoing programme of Dementia friends training, and a week and of information, support, and advice for Dementia Action Week (20-26 May 2019).
With this initiative, the PPF aims to help its member-facing employees recognise, and support effectively, some of the more vulnerable members of the PPF.