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
- Legislation on repayment of the overseas transfer charge
- BEIS Committee responds on ‘The Future of Audit’
- Government publishes response to pensions dashboard consultation
- EIOPA launches 2019 Occupational Pensions Stress Test
- European Parliament approves PEPP regulation
Since 9 March 2017, a 25% overseas transfer charge is deducted from transfers of UK pension savings to QROPS, except in set circumstances (these include, for example, where the member is resident in the country where the QROPS receiving the transfer is based, or the receiving QROPS is an occupational pension scheme and the individual is an employee of a sponsoring employer under that scheme). Final regulations have now been laid, and come into force on 25 April 2019, in relation to the repayment of charges:
- the Pension Schemes (Information Requirements – Repayment of Overseas Transfer Charge) Regulations 2019 detail the conditions and process for claiming a repayment of the overseas transfer charge, where the charge was either paid in error or a change in the individual’s circumstances means the original transfer was exempt from the charge
- the Pension Schemes (Information Requirements – Qualifying Overseas Pension Schemes, Qualifying Recognised Overseas Pension Schemes and Corresponding Relief) (Amendment) Regulations 2019 aim to align existing QROPS information requirements with those detailed in the draft Repayment of Overseas Transfer Charge regulations.
Once the regulations are in force, guidance on the process for claiming and reporting repayments of an overseas transfer charge is expected to be included in HMRC’s Pensions Tax Manual.
On 2 April 2019, the House of Commons’ Business, Energy and Industrial Strategy Select Committee published its report on “The Future of Audit”.
The report responds to the Brydon Review into UK Audit Standards and the CMA’s market study into the effectiveness of competition in the audit market, and contains the Committee’s recommendations. These include:
- calling for a tightening of the UK dividend regime and action from the regulator (currently the FRC) to produce “a clearer and more prudent definition” of realised profits
- endorsing the CMA’s proposed operational split between audit and non-audit functions, but arguing that going further, with full structural break-up of the ‘Big Four’ firms into audit and non-audit businesses, would be desirable
- addressing the lack of competition with the use of joint audits, on a pilot basis, for the most complex audits, and increasing the frequency of audit rotations to seven-year non-renewable terms.
On 4 April 2019, the DWP published its response to the consultation and feasibility study on the pensions dashboards, stating that it supported the development of “multiple industry-led dashboards”. Industry (referred to by the DWP as “the wider pensions industry”, including private and public sector pension schemes of all types, third party administrators, IFAs, professional advisers and others) has confirmed that initial models will be developed and tested from this year. A non-commercial dashboard will be delivered and overseen by the Money and Pensions Service (the new single financial guidance body).
The Government’s plans include:
- a commitment to bring forward legislation “at the earliest opportunity” to compel all pension providers to make consumers’ data available to them through a dashboard
- an expectation that the majority of schemes will be ready to ‘go live’ with their data within a 3 to 4-year window, with phased ‘staging’
- State Pension information being made available “as soon as possible”
- exempting some micro schemes from the requirements (with further work required before any such exemptions are granted).
An industry delivery group will be brought together by MAPS with the aim of “set[ting] out a clear timetable and roadmap to drive progress towards fully operational dashboards, setting standards and ensuring security to protect users and their information”.
EIOPA has launched its biennial stress test of the European occupational pensions sector, examining its resilience and vulnerabilities. The core assessment looks at the potential impacts of a “stressed market scenario” on the sustainability and funding of DB schemes and on the projected future retirement income of members of DC schemes. For the first time, the test also includes an assessment of ESG exposure and risk management practices.
Data is to be submitted to EIOPA, via national regulators, by 19 June 2019. The results and conclusions of the stress test are expected to be published by the end of 2019.
On 4 April 2019, the European Parliament adopted the European Commission’s proposal for a regulation on a Pan-European Personal Pension Product (“PEPP”).
Following the adoption, the new regulation will need to be adopted by the Council, and then enter into force 20 days after the regulation’s publication in the Official Journal.