Pensions news

PENSIONS BILL 2013

The Pensions Bill 2013 has been laid before Parliament.

It includes provision for, among other things:

  • introduction of the single tier state pension;
  • abolition of DB contracting-out – employers will be given a power to increase employee contribution rates and/or change benefits payable under schemes to reflect the increase in employer NICs;
  • establishment of the framework for the automatic transfer of small DC pots;
  • a power to prohibit incentives to transfer out of DB schemes;
  • a power to exclude certain categories of worker from the scope of automatic enrolment; and
  • a new statutory objective for the Pensions Regulator to "minimise any adverse impact on the sustainable growth of an employer" when exercising its scheme funding powers.

The Pensions Minister also announced that the Government will ban consultancy charging in automatic enrolment schemes (whether occupational or personal pension schemes) (regulations to achieve this have now been laid before Parliament), and will consult this autumn on a cap on other charges.

Action

No action required.

SCHEME PAYS: NEW REGULATIONS

Regulations have come into force which provide for a pension to be reduced in order to satisfy an annual allowance charge under "scheme pays" without triggering adverse tax consequences. The regulations apply in respect of pension reductions made on or after 6 April 2013.

Action

No action required.

DIRECTORS’ REMUNERATION: NEW REPORTING REQUIREMENTS

Regulations have been laid before Parliament which make changes to the requirements for the reporting of directors’ remuneration by most quoted companies for financial years ending on or after 30 September 2013.

Amongst other information, companies will be required to disclose information about pension benefits accrued by directors (and payments made in lieu of retirement benefits) in the financial year covered by the remuneration report.

Action

Quoted companies should ensure that they keep sufficient records of directors’ pension-related benefits to enable them to complete the relevant sections of the remuneration report.

LIFETIME ALLOWANCE: INDIVIDUAL PROTECTION REGIME

The Treasury and HMRC have published a joint consultation on the proposed individual protection regime that is to apply in respect of the 2014 reduction in the lifetime allowance (LTA).

Essentially, a member with individual protection will have an LTA equal to the value of their pension savings on 5 April 2014 (subject to a maximum of £1.5m), but will be able to make further pension savings without losing the individual protection (unlike fixed protection).

Action

No action currently required.

MAINTAINING CONTRIBUTIONS: CONSULTATION RESPONSE

The Pensions Regulator has published a response to its consultation on revised versions of its Codes of Practice 5 and 6 on reporting late payment of contributions to DC schemes. The revised Codes focus on maintaining the flow of contributions to schemes rather than just the reporting of late payment of contributions and will come into force this autumn. The Regulator has also issued employer guidance to accompany the Codes.

Action

Employers and those responsible for administering DC schemes should review the new Codes to understand their obligations under them.

FATCA: UK GUIDANCE

HMRC has published the final version of guidance on the implementation of the US-UK intergovernmental agreement on FATCA which clarifies that UK registered pension schemes will not be subject to reporting requirements under FATCA.

Action

No action currently required, but, although exempt from the reporting requirements, schemes with US investments may need to provide confirmation to the managers of those investments of their registered pension scheme status.

PENSIONS REGULATOR: GUIDANCE ON DC SCHEME RETURNS

The Regulator has published two guidance notes to help trustees/managers of DC schemes complete their scheme return.One is for schemes with 2 – 11 members, whilst the other is for schemes with 12 or more members. The DC scheme return contains a number of new questions this year.

Action

Those responsible for completing the scheme return on behalf of DC schemes should read the relevant guidance note.

PENSION SCHEMES NEWSLETTER 57

HMRC has published its Pension Schemes Newsletter 57 which covers:

  • changes to the annual and lifetime allowances;
  • pensions liberation;
  • trivial commutation and similar payments;
  • the re-write of the RPSM; and
  • pension scheme registrations.

Action

No action required, but those responsible for administering schemes may wish to review the section of the Newsletter dealing with trivial commutation and similar payments.

PPF COMPENSATION: INCREASED CAP

The Pensions Minister has announced that the PPF compensation cap is to be increased for long-serving members. The new cap will be introduced "as soon as Parliamentary time allows", but will not be backdated.

Action

No action required.

DEFINED AMBITION: UPDATE THIS SUMMER

The Pensions Minister has confirmed that an update on the Government’s defined ambition plans will be published this summer.

Action

No action required.

DUAL ACTUARIAL ADVICE APPOINTMENTS: REQUIREMENT FOR CONFLICTS POLICY

A reminder that from 1 July 2013, actuaries wishing to advise both the employer and the trustees of a scheme are required to put in place a written policy for managing conflicts of interests.

Action

If the scheme actuary also advises the employer, ensure that a conflicts policy is in place.