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

Changes coming into force on and from 6 April 2016

In yet another busy year for pension schemes, the tax rules (see our previous Alert) are not the only things changing on and from 6 April 2016. A host of other reforms will also come into effect from that date. For full details, please see our Alert.

Citizens Advice publishes report on pension scams

On 31 March 2016, Citizens Advice published “Too Good to be True?” – an investigation into consumer experience and understanding of pension scams. It focuses upon the developing nature of pension scams and whether consumers are equipped to identify them, and makes four key findings:

•  consumers are receiving high levels of unsolicited calls, with around 10 million consumers having received unsolicited contact about their pension since April 2015
• many people are being offered unsolicited pension reviews or advice
• most consumers are unable to spot scam warning signs
• consumers are most likely to turn to informal sources to check for a scam.

Citizens Advice recommends the following actions be taken to reduce consumer detriment through scams:

• pension firms should work with Project Bloom members to continue promoting awareness of scam warning signs to consumers
• extending the FCA ScamSmart portal to include scam warnings for possible advice / review scams
• bodies such as Action Fraud and the Information Commissioner’s Office should continue monitoring levels and types of pension contact and respond to emerging scams / trends
• financial advisers should avoid using lead generators who make unsolicited calls or use high pressure tactics.

HMRC publishes Pension Schemes Newsletter 77

HMRC published Pension Schemes Newsletter 77, on 29 March 2016. Among other things, it includes information on:

•  measures announced in the Budget 2016
•  the reduction in the LTA, with additional information on the transitional protections (FP16 and IP16) in appendices, plus updated pro forma letters for individuals to use when contacting HMRC for the interim protections
•  pension flexibility, including information on tax repayment claims for pension lump sum death benefits payments, and taxable pension death benefit lump sums paid to a trust
In addition, the Newsletter confirms that the Government intends to consult on the detail of the tax framework for the new secondary annuity market in the spring of 2016.

PPF publishes updated Transformation Appendix to Levy Determination

On 30 March 2016, the PPF published an updated version of the Transformation Appendix to its 2016/17 Levy Determination, to correct an omission of part of the intended text. The policy intent was that the methodology was unchanged from 2015/16, and the correction to the Appendix clarifies the intended methodology.

A marked up copy of the original Transformation Appendix has been made available. No other part of the Determination was changed.

TPR publishes automatic enrolment research

On 31 March 2016, TPR published two summaries of results identifying employers’ and intermediaries’ awareness and understanding in relation to auto-enrolment.

The surveys found increased awareness of automatic enrolment, the “Workie” campaign, and of TPR itself. Key findings included:

• awareness of automatic enrolment remained similar to spring 2015 among small and micro employers (90% and 78%) while understanding increased significantly (68% among small employers, 56% among micros)
• correspondence from TPR was the main trigger for employers to take action to prepare for automatic enrolment (76%), followed by information from an adviser (43%), and then seeing or hearing advertising (23%)
• bookkeepers and accountants saw significant increases in overall understanding of automatic enrolment compared to spring 2015, from 78% to 93% and 85% to 96% respectively.

Work and Pensions Committee publishes report on communication of new state pension

The House of Commons Work and Pensions Committee published its Eighth Report of Session 2015/16 on 27 March 2016, which states that Government communications have not made it “sufficiently clear” that most pensioners on the new state pension will not receive the full £155.65 weekly flat rate. The report recommends that the DWP should contact those affected directly, and others with gaps in their contribution records, to explain their personal circumstances, and offer a telephone hotline with experts available to give advice. Concerned by the Government’s reliance on individuals requesting a state pension statement, it also recommends that people aged 50 or over, unless they opt out, should be sent annual state pension statements

Work and Pensions Committee re-opens auto-enrolment inquiry

On 29 March 2016, the Work and Pensions Committee re-opened its inquiry into auto-enrolment after concerns were raised that Lifetime ISAs (“LISA”) (announced in the Budget 2016), could undermine auto-enrolment as people may choose to opt-out and save in a LISA instead of their employer pension.

The Committee has invited submissions addressing questions of whether the LISA is compatible with auto-enrolment and the Government’s wider pension strategy, what impact they may have on opt-out rates, and what kind of guidance should be made available to help people choose where to save their money.

The deadline for written submissions is 17 April 2016.

Mather vs Teachers’ Pensions (Pensions Ombudsman) – 16 February 2016

The Deputy Pensions Ombudsman (“DPO”) held that in the circumstances of this case, it was reasonable for the member to rely upon incorrect retirement benefit quotations.

Please see our case report for further details.