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
- HMRC Pension schemes newsletter 87 published
- ROPS list suspended and updated
- IFoA publishes bulletin on intergenerational fairness and retirement
- PPI issues new Briefing Notes
- PRA issues update on risk-based levies for FSCS
- TPR approves pension restructuring deal
Pension schemes newsletter 87 was published by HMRC on 1 June 2017. Amongst other things, it:
- notes that a scheme administrator may decide whether an email from a member who is requesting the pension advice allowance constitutes a request “in writing” for the purpose of the Authorised Payments regulations
- reminds schemes operating relief at source that they must submit their annual information returns for the tax year 2016/17 by 5 July 2017
- gives further information in relation to the Scottish rate of income tax and relief at source
- discusses the difference between pension scheme returns and the SA970 tax returns for schemes and when each form needs to be completed.
The newsletter also outlines changes to the scheduled publication of the ROPS notification list (see below).
HMRC has once again temporarily suspended the recognised overseas pension scheme (“ROPS”) notification list. The list is due to return today, Monday 5 June 2017. Versions of the list dated before 5 June 2017 should no longer be relied upon.
In the Spring Budget 2017, the Chancellor announced the introduction of a 25% charge on certain transfers to QROPS (ie schemes that have notified HMRC that they meet the conditions to be a ROPS) which had previously been tax free. The new charge came into effect from 9 March 2017, with a view to aligning the tax treatment of overseas and UK pension schemes. Since that date, an overseas scheme is no longer a QROPS, unless the scheme manager has given an undertaking to HMRC that it will operate the new overseas transfer charge and pay this to HMRC when due.
Managers of schemes that were QROPS under the pre-9 March 2017 rules were required to submit a revised undertaking to HMRC by 13 April 2017 if they wanted their scheme to continue as a QROPS. The list was suspended at this point to allow HMRC to remove schemes that had not provided the relevant undertaking, and republished on 18 April 2017 when the process was complete. HMRC has since announced (on 2 June 2017) that it has written to the managers of some QROPS requesting information and confirmation that their QROPS meets the revised requirements.
HMRC states that schemes will not be included in the republished list if:
- it has not received a response from the scheme manager by 1 June 2017, or
- the scheme manager’s response indicates that the scheme no longer meets the conditions to be a ROPS.
Routine updating of the ROPS list is due to recommence on 15 June 2017.
On 31 May 2017, the IFoA published the second in a series of bulletins on intergenerational fairness.
In the report, pension experts discuss how the evolution of retirement saving across private and public pensions has contributed towards a potential intergenerational imbalance, and look at what could be done to make the system more fair and sustainable in the long term.
The PPI has published three new Briefing Notes. Briefing Note 96, “Everything you always wanted to know about the triple lock but were afraid to ask…”, published on 30 May 2017, discusses issues surrounding the future of the “triple lock” for both current and future pensioners.
Briefing Note 97, “General Election 2017 State Pension age rises”, published on 2 June 2017, summarises the key issues surrounding State Pension age (SPA) increases in the run up to the General Election. It discusses the reasons for increases in SPA, and includes data concerning groups affected by those increases and the long-term affordability of the State Pension.
Finally, Briefing Note 98, released today, 5 June 2017, summarises the policies related to retirement and pensions from party manifestos in the run up to the General Election. For more on these, please see our Alert – General Election 2017: Party policies on pensions.
On 31 May 2017, the PRA issued an update on the Financial Services Compensation Scheme (“FSCS”).
The update notes that, as set out in PS25/16 ‘Implementing risk-based levies for the Financial Services Compensation Scheme deposits class’, FSCS compensation costs levies will be adjusted for the degree of risk incurred by deposit takers for the first time this year, as required by the recast Deposit Guarantee Schemes Directive. Compensation costs levies were previously based solely on the proportion of covered deposits held by a firm. Wholesale deposits are also included in covered deposits for the first time. Legacy cost levies are not affected by the risk adjustment.
TPR announced on 2 June 2017 that it had approved a proposal by Hoover Limited regarding the Hoover (1987) Pension Scheme (“HPS”).
As part of a regulated apportionment arrangement (“RAA”), the HPS, which has 7,500 members, will receive £60 million from Hoover and is expected to transfer into the PPF. The scheme will also receive ordinary shares representing a 33% stake in Hoover. Hoover and HPS trustees have agreed the RAA and TPR granted clearance to the proposal. Formal approval of the RAA was issued on 30 May 2017.
Nicola Parish, TPR’s Executive Director of Frontline Regulation said: “We do not agree to these types of arrangements lightly but in this case we believe it is the right outcome for scheme members and the PPF […] This type of pension restructuring is rare, and will only be agreed in accordance with our published guidance, so that RAAs are not abused by businesses seeking to offload their pension liabilities. We insisted on clear and extensive evidence to show that Hoover would inevitably fall into insolvency without a restructuring of its pension arrangements.”