7 days

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:

Update on mortality and longevity in the UK

On 5 September 2014 the IFoA published a six monthly update on developments in the UK in mortality and longevity.

Pension Schemes Bill receives second reading

The Pensions Schemes Bill received its second reading in Parliament on 2 September 2014.  The Bill is intended to introduce reforms which will enable the development of DA and collective pension schemes.  The Government hopes that such schemes will give more workers the opportunity to save into plans which offer more guaranteed retirement incomes.
In addition the Bill promises to:

  • give people much greater flexibility on how and when they access their savings, following the major reforms announced in the Budget (for details, please see our Alert)
  • introduce a “guidance guarantee” where everyone with a DC pension arrangement is offered free, impartial guidance so they are clear on the range of options available to them at retirement
  • put in place additional safeguards to protect individuals and pension schemes when people consider transferring out of a DB scheme.

For further details of the draft Bill, please see our Alert.

NEST restrictions to be lifted

Restrictions on NEST are now set to be scrapped from April 2017, the DWP has announced, following negotiations between ministers and the European Commission. The Government will consult later in the year on:

  • lifting the annual contribution limit of £4,600
  • allowing NEST savers to transfer their benefits.

GAD publishes monthly update on investment and risk

On 2 September 2014, GAD’s investment and risk team issued its monthly update on economic indicators and other trends in finance.

Chancellor announces date for Autumn Statement 2014

The Chancellor of the Exchequer, George Osborne, has announced that he will give his annual Autumn Statement to Parliament on 3 December 2014.

The statement provides an update on the government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility.  These forecasts will be published alongside the Autumn Statement on 3 December.

The government is now seeking views on what businesses, charities and members of the public would like to see in the Autumn Statement 2014.  Submissions should be sent to HM Treasury by 17 October.  HMT has issued guidance on how to submit a representation.

HMT issues Preston guidance for September 2014

Following the CJEU and House of Lords’ rulings in 2000/2001 in favour of part-timers gaining retrospective access to occupational pension schemes, provided they meet the necessary legal requirements (see our Pensions Essentials, “Discrimination: Part-timers” for details) the Preston factors (earnings and interest factors) are provided for employers.

The factors are used to provide those entitled to reinstatement, an opportunity to gain pension service at no cost to them, which as far as possible makes these individuals no better and no worse off than if they had paid contributions to the scheme when they were originally employed.

On 4 September 2014, HMT issued the Preston factors for September 2014.

PPI issues Briefing Note: “Increasing pension saving in the UK”

The PPI has published a briefing note on “Increasing pension saving in the UK“.

The note explores the factors that could affect the adequacy of retirement income and discusses the challenges that individuals and employers may face when increasing contribution rates, along with some policy and industry responses that could help to address those challenges and increase overall levels of saving.

TPAS Annual Pension Review

TPAS has published its 2013/14 annual review.

During 2013/2014, TPAS delivered nearly 80,000 pieces of guidance and, through its helpline, connected with 15,109 customers.  A new web chat facility was also launched which provides a more responsive service.  TPAS’ complaint work continues to be successful in resolving over 90% of the cases.

The Treasury has named TPAS as a delivery partner for the “at retirement” guidance that it has pledged to make available to people facing choices at retirement.

TPR issues checklists for 2014 scheme returns

TPR has published checklists which identify new information trustees will need before they can complete their 2014 scheme returns.

DB schemes will need:

  • financial assumption information (if the scheme is in surplus)
  • value at risk (VaR) information – generally undertaken by the scheme’s actuary or investment consultant, a VaR calculation is a common method for assessing the size and likelihood of potential risks happening over a defined period of time
  • information relating to the structure, valuation and term of any ABC arrangement.

DC schemes will need to provide additional or different information in several areas, including in relation to:

  • contributions
  • net scheme assets
  • trustees
  • membership

Certain of the changes only apply to schemes with 12 or more members.

TPR has also published a sample 2014 return form for a DB and a DC scheme.

Money Advice Service announces new financial adviser directory

Following a consultation in June 2014, the Money Advice Service’s (MAS) proposal to launch a new financial adviser directory is set to go ahead.

The new directory will be built and hosted within MAS’ existing site, and will aim to be launched by April 2015 to coincide with the new Retirement Guidance Service.  Advisers will not have to pay to be listed in the directory; however, MAS is currently establishing an independent panel of consumer and industry representatives to set the criteria for inclusion.

The independent panel will decide whether the directory should contain details only of retirement specialists, or be opened up to include advisers covering all areas of regulated financial advice.  They will also be asked to agree on how fees and charges can best be incorporated into the directory, so that consumers can compare the costs of product and services more accurately.