1 Tapered annual allowance – From 6 April 2016, the annual allowance will be reduced for many people with taxable income over £150,000 a year. For those with taxable income over £210,000 a year, the annual allowance could fall to £10,000. Employers need to decide how to respond to this, implement any changes and communicate with their staff.
Action: Assess impact and decide response. Implement changes to employment contracts, plan rules, systems and member comms. Inform staff.
2. End of DB contracting-out – Sponsors of contracted-out DB pension plans that have not already done so need to decide whether to amend their plan to offset the loss of their national insurance rebate following the end of DB contracting-out in April 2016. Immediate action will be needed to implement any changes by April.
Action: Affected sponsors should seek immediate advice on options for offsetting the loss of their NI rebate.
3. New single tier state pension – Where a plan’s benefit design is integrated with the current state pension system (e.g. there is a basic state pension offset or definitions refer to the state second pension), the rules may need to be amended to reflect the introduction of the new single tier state pension from 6 April 2016.
Action: Review plan rules and amend as necessary.
4. Assessing value for money – Trustees of plans that provide any 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
5. First annual DC governance statement – Trustees of plans that provide any money purchase benefits (including AVCs in some cases) must produce an annual governance statement, signed by the Chair, as part of the annual report and accounts for plan years ending on or after 6 July 2015. This will need to detail how the trustees have discharged their new governance requirements.
Action: Review compliance with new DC governance requirements and prepare first Chair’s statement. Read more
6. PPF levy deadlines approaching – Trustees and sponsors of DB plans wishing to reduce their plan’s 2016/17 PPF levy will need to take action early in 2016, especially if they wish to put contingent assets in place for the first time or re-certify existing contingent assets. The PPF’s strict levy deadlines for the 2016/17 levy year are set out on its website.
Action: Ensure actions to reduce your plan’s PPF levy are taken by the relevant deadlines, as these are applied strictly.
7. GMP reconciliation – Trustees wishing to use HMRC’s GMP reconciliation service must register to do so before 5 April 2016. After that, it will be too late. Trustees who do not reconcile their plan’s GMP data with that held by HMRC are at risk of paying incorrect benefits to members and adversely affecting individuals’ state pension entitlements.
Action: Assess cost implications and options for offsetting this. Update plan rules, communications and admin processes, as appropriate.
8. 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. It is crucial that employers are aware of these. 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
9. Ban on active member discounts and commission payments – DC plans that are qualifying schemes for auto- enrolment purposes must eliminate higher charges for non- contributing 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.
10. VAT and pension plan costs – HMRC has extended the transitional period before introducing its new policy on recovering VAT on pension costs to 31 December 2016. However, sponsors, trustees and their service providers still need to consider how they will respond to HMRC’s change of policy and implement any necessary changes before the transitional period expires. Further guidance is expected early in 2016.
Action: Assess impact of HMRC’s new approach and identify actions that need to be taken before the end of the year to enable VAT to be recovered. Read more