- Abolition of DC short service refunds – Where an individual joins a DC occupational pension plan after 1 October 2015, the trustees can only pay a refund of contributions where that individual leaves the scheme within 30 days of joining, subject to any right to opt-out under the auto-enrolment legislation. This change is not overriding. Therefore, plan rules that have hardwired in the previous two year limit need to be amended. This could have cost implications for employers, particularly those with a high turnover of staff.
Action: Assess cost implications and options for offsetting this. Update plan rules, communications and admin processes, as appropriate. Read more.
- PPF levy – Invoices for the 2015/16 PPF levy year are now being issued. Trustees who want to appeal their invoice must take immediate action as the tight appeal deadlines are strictly applied. The PPF has also indicated that it will re-invoice plans that have historically indicated that they are last man standing schemes where this is not actually the case, to recover the discount that they will have benefited from.
Action: Review levy invoice upon receipt and take immediate action if you have any queries or concerns. DB plans that are believed to be last man standing schemes need to obtain a legal opinion confirming this. Read more
- Retaining power to make payments to employers – To retain their existing powers to make payments to employers, DB plans must pass a resolution under section 251 Pensions Act 2004 before 6 April 2016. Three months’ notice must be given to members and employers before the resolution is passed. Trustees that have already passed a resolution should check the strict statutory requirements have been met as they will not be able to put things right after 6 April.
Action: Give three months’ notice and pass resolution. Check validity of any resolutions already passed.
- Tapered annual allowance – The new tapered annual allowance is likely to apply to more people than expected. Employers need to assess the impact on their staff, decide how to respond and implement and communicate any changes. Trustees need to update their systems and communications.
Action: Assess impact and decide response. Implement changes to employment contracts, plan rules, systems and member comms. Inform staff. Read more.
- Assessing value for money – Trustees of plans that provide money purchase benefits (including AVCs in some cases) and IGCs are now required to assess and report on the extent to which member-borne charges and transaction costs represent “good value”/“value for money”. These terms are not defined in legislation, so trustees and IGCs need to determine how they will assess this.
Action: Decide approach to assessing “good value”/“value for money” and draw up policy to record this. Read more
- Preparing for automatic re-enrolment – It is three years since the automatic enrolment requirements were first introduced and larger employers are approaching their first automatic re-enrolment date. There are subtle, but important, differences between the rules for automatic enrolment and re-enrolment and it is crucial employers are aware of these (check out our training). Employers also need to decide whether to apply the new exemptions from auto-enrolment.
Action: Understand re-enrolment requirements and new exemptions. Select automatic re-enrolment date. Test payroll software. Prepare re-enrolment communications. Submit declaration of compliance. Read more.
- End of DB contracting-out: 6 months and counting – Sponsors of contracted-out DB pension plans that have not already done so need to decide how to respond to the abolition of DB contracting-out in April 2016. Changes to their plan may be needed to offset the loss of their national insurance rebate and to modify benefits that are linked to the state pension. These may take some time to implement.
Action: Affected sponsors should assess the impact of the end of DB contracting-out on their pension costs (and benefits) and seek advice on options for offsetting this.
- First annual DC governance statement – DC plans’ first annual governance statement, signed by the Chair, must be produced as part of the annual report and accounts for the plan year ending on or after 6 July 2015 (from 6 April 2015 to the reporting date). This will need to detail how the trustees have discharged their new governance requirements.
Action: Review compliance with new DC governance requirements and begin to prepare first Chair’s statement. Read more.
- Ban on active member discounts and commission payments – DC plans that are qualifying schemes for autoenrolment purposes must eliminate higher charges for noncontributing members by 6 April 2016. All member-borne commission payments are also expected to be banned from this date.
Action: Modify charging structures to eliminate active member discounts and be prepared to take action to end member-borne commission payments.
- New pensions accounting standard – A revised Statement of Recommended Practice (SORP) for pension plan accounts prepared in accordance with FRS102 (which covers most UK plans) applies for scheme years on or after 1 January 2015 (with early adoption permitted). This could affect sponsors of DB plans by reducing plan asset values due to new “fair value”/“mark to market” valuation requirements and bringing DB deficits onto some sponsors’ accounts (e.g. those with multi-employer plans) for the first time.
Action: Assess impact of new SORP on sponsor accounts and prepare for adoption.