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 publishes consultation response on draft Occupational Pension Schemes (Charges and Governance) (Amendment) Regulations 2017
- European Commission launches new Pan-European Personal Pension Product
- FCA publishes final report into asset management sector
- FCA publishes rules on 2017/18 regulatory fees and levies
- HMRC pension schemes newsletter 88 published
- HCL Briefing paper on Brexit and State Pensions published
- TPR warns employers not to fall for exemption certificate scam
- TPR publishes report on BHS case
DWP publishes consultation response on draft Occupational Pension Schemes (Charges and Governance) (Amendment) Regulations 2017
The DWP has published a response to its consultation on the draft Occupational Pension Schemes (Charges and Governance) (Amendment) Regulations 2017, which ran from 5 April to 31 May 2017.
The draft regulations have been designed to:
- introduce restrictions on early exit charges for members of occupational pension schemes who are eligible to access the retirement flexibilities (or so-called “pension freedoms”); and
- restrict charges being imposed on members of certain occupational pension schemes to recoup the costs of commission payments made to advisers in relation to contracts entered into before 6 April 2016.
The Government has considered the feedback it received and will now amend the draft regulations where appropriate. It will lay the revised regulations before Parliament for their consideration in due course. The intention is for the regulations to come into force on 1 October 2017.
On 29 June 2017, the European Commission released a proposal to implement a “simple and innovative” Pan-European Personal Pension Product (“PEPP”) in the EU. The new type of voluntary personal pension is designed with the aim of giving savers “more choice when they are putting money aside for old age and provide them with more competitive products”.
The PEPPs, which will be portable between EU Member States, will have the same standard features wherever they are sold in the EU and can be offered by a broad range of providers, such as insurance companies, banks, occupational pension funds, investment firms and asset managers. They are intended to complement existing state-based, occupational and national personal pensions, but not replace or harmonise national personal pension regimes.
The Commission also recommended that Member States grant the same tax treatment to this product as to similar existing national products, to ensure that the PEPP can work successfully.
EIOPA, the EU regulator for insurance and pensions products, will be responsible for authorising PEPPs and for maintaining a central, EU-wide, register.
It is now up to the European Council and Parliament to discuss the proposal. If adopted, the first PEPPs are expected to come on the market two years after the PEPP regulation comes into force.
On 28 June 2017, the FCA published the final findings of its asset management market study.
The FCA launched the market study in November 2015, to assess whether institutional and retail investors get good value for money when purchasing asset management services. In November 2016, the FCA published its interim findings, which set out its provisional view on the way competition works for asset management services, the resulting outcomes for investors and its proposed remedies to address the concerns it identified.
The FCA’s final report confirms its interim findings, and sets out the package of remedies it intends to take forward to address its concerns in relation to the asset management market. The measures seek to “make competition work better”, and to protect those least able to engage actively with their asset manager. They include requiring increased transparency and standardisation of costs and charges information for institutional investors, and exploring the potential benefits of greater pooling of pension scheme assets.
The report also notes that certain investment consultants face a reference to the Competition and Markets Authority (“CMA”), with a final decision to be made in September 2017.
Finally, the FCA published a consultation alongside the report which proposes to change the way in which it regulates authorised fund managers. The consultation closes on 28 September 2017.
We expect additional consultations later in the year.
For further details, please see our Alert.
On 3 July 2017, the FCA published a policy statement containing rules on the 2017/18 regulatory fees and levies for the FCA, FOS, MAS, and pensions guidance levies.
The policy statement also contains feedback on responses received to the consultation on the draft fees and levies rules (CP17/12).
The FCA’s fee calculator is available for firms to calculate their individual fees based on the final rates. It will invoice fee-payers from July 2017 onwards for their 2017/18 periodic fees and levies.
Pension schemes newsletter 88 was published by HMRC on 30 June 2017. Amongst other things it:
- issues a final reminder for schemes operating relief at source to submit their annual return of individual information for the tax year 2016 to 2017 by 5 July 2017
- clarifies HMRC’s responses to requests for confirmation of a receiving scheme’s registration status
- reminds that old-style forms submitted in respect of overseas transfers from 9 March 2017 will be rejected, and that if the newly-required information is not provided within the relevant timescales penalties will arise
- notes the development of a lifetime allowance look-up service for scheme administrators, and of an additional member function to report lost lifetime allowance protections.
In addition, in relation to Scottish Income Tax, it:
- gives information on a residency tax status look up service for pension scheme administrators, and details of how administrators may access an external test environment
- notes the future amendment of certain forms
- informs administrators that they must register now for HMRC’s Secure Data Exchange Service (“SDES”), to be able to apply the correct rate of relief at source to members from 2018 onwards.
On 27 June 2017, the House of Commons Library updated its briefing paper on the possible impact of Brexit on entitlement to the UK State Pension, and the EU rules which require the co-ordination social security schemes for people moving within the EU, the EEA and Switzerland.
The report has been updated in light of the Government’s publication on 26 June 2017 of its offer for EU citizens in the UK, and UK nationals in the EU, on their rights and status after the UK leaves the EU.
TPR issued a press release on 30 June 2017, warning employers not to fall for a scam involving the sale of fake certificates which suggest that they do not have automatic enrolment duties.
The Regulator is investigating at least one company that is offering employers what it describes as “Certificates of Auto Enrolment Exemption”. A number of employers are known to have been persuaded to pay for such documents, with the scammers claiming the paperwork means the holders do not have any workplace pension duties.
Anyone offered the chance to buy a certificate of exemption or any similar sounding document is being urged to decline and contact TPR immediately.
On 27 June 2017, TPR published a report into its involvement with the BHS pension scheme that led to a £363 million settlement with Sir Philip Green.
The regulatory intervention report covers key actions in the case, including TPR’s anti-avoidance investigation into the potential use of its Financial Support Direction and Contribution Notice powers. The investigation culminated in TPR issuing Warning Notices against a number of respondents in November 2016.
The report looks back to TPR’s interactions with the BHS pension schemes over a number of years, including previous scheme funding discussions and business restructuring proposals.
Nicola Parish, Executive Director of Frontline Regulation, said: “The report highlights the lessons we have learned from this case about how we can regulate more effectively.
We are already acting more quickly to intervene where we consider schemes to be underfunded, or where there are indications that employers may be avoiding their responsibilities. As part of our TPR Future programme, we are reviewing our internal processes and ways of working to be more efficient, more outcome-focused and communicate clearly to schemes what we expect from them.
In addition we are recruiting staff to increase proactive casework, ensure early engagement with schemes and progress investigations more efficiently.”