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
- Pension (Non-Taxable Payments Following Death) (Real Time Information) Regulations 2021
- Briefing paper on uprating public service pensions
- FCA proposals on “nudge” to pensions guidance
- HMRC issues Pension Schemes Newsletter 129
- HMRC updates guidance on Trust Registration Service
- PASA announce DC Transfer Working Group
- PPF confirms actuarial assumption changes
- TPR and PPF consult on updates to DB data
- UKSIF report encourages sustainability “upskilling” for pension scheme trustees
- WPC launch inquiry on pension stewardship
The Pension (Non-Taxable Payments Following Death) (Real Time Information) Regulations 2021 were laid before Parliament on 27 April 2021 and are due to come into force on 6 April 2022.
Since 6 April 2013 (for most employers), information on payments to employees must be provided to HMRC in real time “on or before” the date the payment is made. Currently those making pension payments to individuals are required to send information to HMRC using the Real Time Information (“RTI”) system. These regulations extend the requirement to non-taxable payments after the death of a member of a pension scheme. The regulations aim to give HMRC full and complete information about both taxable and non-taxable payments to help ensure that an individual pays the correct amount of tax based on all their income for PAYE purposes.
On 28 April 2021, HMRC published the related tax information and impact note.
On 26 April 2021, the House of Commons Library published a new briefing paper which looks at the statutory arrangements for uprating public service pensions, including the switch to CPI in 2011 and the introduction of GMP increases from April 2016.
On 4 May 2021, the FCA published a consultation paper exploring what the FCA can do to increase the take-up of Pension Wise guidance, and proposing new rules to require pension providers to “nudge” consumers to Pension Wise, including booking an appointment for them with Pension Wise if the consumer wishes. Currently, providers are required to signpost consumers to Pension Wise guidance and encourage them to seek appropriate pension guidance or advice, but take-up of Pension Wise guidance remains low.
The proposals form part of the Government’s stated aim to encourage consumers to take ”appropriate pensions guidance” (see 7 Days).
The consultation closes on 29 June 2021.
On 30 April 2021, HMRC published Pension Schemes Newsletter 129. The newsletter covers a number of issues, including:
- statistics regarding pension flexibility and registration of new pension schemes
- relief at source for 2021 to 2022 and the deadline for submitting the annual return of information
- a reminder on pension scheme returns
- guidance on migration to the Managing Pension Schemes Service where schemes are winding up
- guidance on enrolling on the Managing Pension Schemes Service
- guidance on signing in to online services
- amendments to the annual allowance calculator
- non-taxable payments following a member’s death and RTI reporting (see above).
New rules were introduced in October 2020, as part of the UK’s implementation of the Fifth Money Laundering Directive (“MLD5”), which extend the scope of the trust register to all UK and some non-UK trusts that are currently open, whether or not the trust has to pay any tax, but with some specific exclusions (see 7 Days). On 4 May 2021, HMRC updated its guidance on trust registration to explain what needs to be done and how to do it. This guidance notes that trustees cannot register trusts under the new rules until later in 2021 when the new Trust Registration Service is ready (this had originally been planned for March 2021) (see 7 Days).
On 4 May 2021, PASA announced the launch of its DC Transfer Working Group whose scope will cover DC to DC transfers to trust and contract-based schemes, both within the UK and overseas. Its main purposes will be to:
- identify barriers to faster and lower risk transfer processing and find ways to reduce or eliminate these
- help PASA members understand STAR reporting requirements
- define the difference between “standard” and “non-standard” transfers
- set out ways in which an appropriate balance between speed and risk can be struck
- set out good standards for all administrators to follow when processing DC transfers
- provide a challenge to the trust-based DC community to improve its transfer processing and complement other initiatives aimed at this common goal
- publish guidance and information to help eliminate transfer delays.
The working group is expected to deliver its recommendations by early 2022.
On 28 April 2021, the PPF published its response to its consultation on proposed changes to the actuarial assumptions under section 143 (“PPF assessment valuations”) and section 179 (“PPF levy valuations”) of the Pensions Act 2004 to bring these assumptions in line with current market pricing (see 7 Days).
The PPF has decided to proceed with the majority of its proposed changes. An amendment to the mortality assumptions under section 143 ensures the PPF does not double-count lower mortality rates for high earners and will only impact schemes with very high earners, which can request bespoke, scheme-specific mortality assumptions if necessary.
The changes came into force on 1 May 2021.
On 29 April 2021, TPR and the PPF published a joint consultation setting out proposed changes to the asset class information to be provided annually by DB schemes via the scheme return. For TPR, the proposed changes will help to measure investment risk and improve the data it holds; for the PPF, the proposed changes will help in understanding when risks may be increasing and improve fairness in levy calculation.
In order to be “proportionate”, the consultation proposes a tiered approach, basing the information requested on scheme size. Smaller schemes (Tier 1) will see only minor changes and larger schemes (Tier 2) will be asked to provide more granular data. Under the proposed changes, the largest schemes (Tier 3) will continue to carry out the bespoke stress calculation as required under the PPF levy rules. Schemes will be able to “trade up” tiers and voluntarily provide more information if they wish.
The consultation closes on 10 June 2021.
On 28 April 2021, the UK Sustainable Investment and Financial Association (“UKSIF”) published a report on its vision for sustainable finance. The report includes policy recommendations across a number of areas including pensions, and calls on the Government and regulators to “seek ways to significantly upskill pension scheme trustees in their understanding of sustainability-related risks and opportunities” to help schemes manage the risks and opportunities, and better safeguard savers. The report also outlines proposals that would ensure at least one trustee with expertise on ESG issues is on all trustee boards and IGCs above a certain size.
On 29 April 2021, the WPC launched an inquiry into the Government’s approach to ensuring pension schemes consider the climate change risks and the role schemes can play in meeting emission reduction targets. The deadline for submissions is 18 June 2021.