"Scheme administrators" of registered pension and group life schemes (usually the trustees) need to act now to ensure information held by HMRC is correct for the purposes of its new Pensions Online Digital Service and avoid inadvertently placing a scheme's registered status at risk. Trustees and employers should speak to their administration teams and check that they are arranging this. Deregistration of a scheme would have significant implications for trustees, members and sponsors, but the risk can easily be avoided. We explain more here.
What is HMRC's new Pensions Online Digital Service?
HMRC announced some time ago that it was going to move its pension scheme registration and administration services onto a new digital platform. The new platform will be known as the Pensions Online Digital Service and will ensure all information HMRC holds relating to registered schemes is in one place. This service will be used for registering schemes, reporting requirements and the issuing of HMRC notifications (amongst other things).
In its recent Pension Schemes Newsletters 89 and 90, HMRC announced that it now intends to migrate registered scheme information to this new Pensions Online Digital Service by April 2018, a year earlier than originally planned.
"Scheme administrators" must act quickly
The "scheme administrator" (here, for HMRC purposes, usually being the trustees) details that HMRC already holds will be cleansed and moved onto the new system automatically. This means that if those details are out of date, missing, or where "scheme administrator" IDs have become inactive through underuse, HMRC may not be able to transfer the necessary details over. If this happens, the "scheme administrator" will need to re-register as a new user after April 2018. Failure to do this could place the registered status of the scheme at risk.
If registration is lost, the scheme will lose its tax privileges and may have to pay a substantial tax penalty. The loss of registered status will have severe implications for trustees, scheme sponsors and members.
HMRC is now asking all "scheme administrators" to log in to its current online service to check that current "scheme administrator" details are up to date. In order to do this, the "scheme administrator" must already have obtained ID details from HMRC - a process that should have been undertaken when their scheme was first established, or reports submitted to HMRC, after April 2006.
Next steps for trustees as "scheme administrators"
Trustees of occupational pension schemes, who will usually be the "scheme administrator" for HMRC purposes, need to be aware of HMRC's intention and the short period of time over which information can be updated. They should check that their administration service providers (usually an external third party, but sometimes 'in-house') are doing what it necessary to ensure that details are correct and that HMRC's migration to its digital service in April 2018 does not place the continued registered status of their schemes at risk.
Also note that this is not just an issue for registered pension schemes, but also registered group life assurance schemes.
This process should be straightforward for the vast majority of registered schemes. However, time is short and the potential implications for schemes are serious, so trustees should check that their administration service providers have this task underway before the end of the year.