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Pensions Spotlight – Issue 61

Friday, 21 May 2021

Welcome to Pensions Spotlight, a monthly selection of items of interest from the world of pensions.

Articles in this edition cover:

Pension schemes newsletter 129

The latest edition of HMRC’s pension schemes newsletter was published on 30 April 2021.  This edition had articles on:

  • Pension flexibility statistics
  • Registration statistics
  • Relief at source
  • Pension scheme returns
  • Winding up pension schemes
  • Enrolling on the Managing Pension Schemes service
  • Signing in to online services
  • Annual allowance calculator
  • Non-taxable payments following a member’s death and Real-Time Information reporting.

Reporting non-taxable payments of death benefits

HMRC has designed regulations that provide the mandatory reporting to HMRC of certain types of non-taxable payments through the Real-Time Information (RTI) system.

They stipulate what information a pension payer must send to HMRC when making a payment through RTI.  Currently, pension payers making payment of PAYE pension income are already required to send to HMRC similar information.  These regulations extend the requirements to payments of non-taxable death benefits, which do not fall into the scope of the current requirements.

The payments covered are the following:

  • The continuation of the payment of a pension or annuity for the balance of a guaranteed period following the member’s death
  • A pension payable on the member’s death (other than that above) or the subsequent death of a dependant, nominee or successor of the member
  • A lump-sum death benefit payment payable on the member’s death, or on the subsequent death of a dependent, nominee or successor of the member, other than a defined benefits lump sum death benefit, or an uncrystallised funds lump sum death benefit.

The Regulations will take effect from 6 April 2022 although the RTI system can already accept non-taxable payment information.

DC Chair’s Statement failing to work as intended

In a post implementation review of The Occupational Pension Schemes (Scheme Administration) Regulations 1996, the DWP has said that the Chair’s statements fail to work as intended.

In the review, the Government, noted that, whilst policy objectives were being achieved in relation to the “vast majority of provisions”, policy objectives in relation to the Chair’s statement were not being achieved within the current approach, particularly as a single instrument trying to achieve multiple goals around governance and engagement.

The review suggested that, in order for the statements to deliver their intended goals, the Government and TPR should consider the intended audience and provide greater clarity to the pensions industry in order “to remove collective confusion and ambiguity”.  The review also recommended further work between the DWP, TPR and the industry as a whole to address the statement’s issues of being too long, complex and costly.

Sarah Smart confirmed as TPR Chair

The Work and Pensions Committee (WPC) has confirmed the appointment of Sarah Smart as TPR Chair. 

Commenting on the appointment, WPC Chair Stephen Timms said: “We wish Mrs Smart every success in her new position and look forward to working with her, and we welcome her commitment to urgently improving transparency at TPR. It plays an important role protecting people’s savings”.

TPR blogs on its new powers

On 19 April 2021, TPR published a new blog, “Time for some perspective on our criminal offences powers”.

Written by David Fairs, TPR’s Executive Director of Regulatory Policy, the blog examines TPR’s new powers under the Pension Schemes Act 2021.

It promises that while it “won’t hesitate to use its powers to protect savers through enforcement when it is the right thing to do”, it does not intend to “overstretch the intent and purpose behind the powers and will always take an appropriate and proportionate approach”.

Importantly it also states that TPR “won’t be targeting acts pre-dating the offences coming into force”.

Pension Scamming

On 8 April 2021, TPR posted its pledge to combat pension scams webinar designed to support the pensions industry on TPR’s Pledge to Combat Pension Scams.

Pensions Minister, Guy Opperman, has also stated that “the Government is working closely with its partners on the best ways to combat, and raise awareness of pension fraud”.  He asked tech companies to “do more to crack down on scam adverts and use their existing powers to verify advertisers and stop taking money from fraudsters”.

Action Fraud is advising those saving for retirement to protect their pension following confirmation that £1.8million has already been stolen through pension fraud this year.

As a result of this, Action Fraud have launched an awareness campaign that explains the importance of researching prior to making any changes to pension arrangements.

Nicola Parish, TPR’s Executive Director of Frontline Regulations, reminded savers to visit impartial guidance services or seek advice from an FCA-authorised adviser and again called on the industry to sign up to TPR’s Pledge.

PSIG have launched their new version of the Code of Good Practice on Combating Pension Scams.

PSIG Chair Margaret Snowdown said, “This version of the code brings scams prevention and development up-to-date. We also expect to produce a further update later in the year when regulations supporting the Pension Schemes Act 2021 are published”.

Key changes relate to the introduction of a new letter from The Pension Regulator for members considering transferring from a defined benefit scheme to a defined contribution scheme, calls for trustees to encourage the use of Pension Wise or take regulated advice, and warnings about complex investment structures.

Trustees of the BT Pension Scheme, Ford Pension Schemes and Marks and Spencer Pension Scheme to seek Judicial Review of the decision effectively to replace RPI with CPIH from 2030

The above sets of Trustees, which represent nearly 450,000 members and over £83 billion of assets, announced they are seeking a judicial review of the decision to effectively replace RPI with CPIH from 2030. They believe the far-reaching implications of this decision have not been fully considered. They feel pensioners will be poorer in retirement (through no fault of their own) either from lower payments or lower transfer values. Women will suffer the most as they typically live longer than men. The reform also reduced the value of RPI-linked assets held to meet pension promises, weakening schemes funding position and therefore adding pressure to sponsoring employers.

PPF Fraud Compensation Fund (FCF) levy increases 2021/22

The Pension Protection Fund (PPF) has confirmed that it will be raising the above levy for 2021/22. Given the value of the claims already received and the PPF’s expectation that following the recent court ruling, further claims against the FCF will be made, they have decided to raise a levy of 75p per member (30p for master trusts) – this is the maximum allowed under the current regulations. The PPF understand the impact this will have on schemes, but they feel there is no other option.

TPR updates its Automatic Enrolment (AE) and DC pension contributions: COVID-19 guidance for employers guidance

TPR has updated its AE and DC pension contributions: COVID-19 guidance for employers with the changes to the Coronavirus Job Retention Scheme and wider government support announced in March 2021.

HMRC updates pension scheme rates and LTA guidance

HMRC has updated the following guidance:

European Data Protection Board (EDPB) Opinions on draft UK adequacy decisions

The two EDPB opinions on the European Commission draft Implementing Decisions on the adequate protection of personal data in the United Kingdom have now been published on the EDPB website.

Opinion 14/2021 is based on the GDPR and assesses both general data protection aspects and government access to personal data transferred from the EEA for the purposes of law enforcement and national security included in the draft adequacy decision.

Opinion 15/2021 is based on the Law Enforcement Directive (LED), and analyses the draft adequacy decision in the light of Recommendations 01/2021 on the adequacy referential under the Law Enforcement Directive, as well as the relevant case law reflected in Recommendations 02/2020 on the European Essential Guarantees for surveillance measures. This is the first draft implementing decision on a third country’s adequacy under the LED ever presented by the European Commission and assessed by the EDPB.

Pensions Dashboards Programme (PDP) issues Invitation to Tender for digital architecture

The PDP issued an Invitation to Tender (ITT) for a supplier to provide the digital architecture that will allow people to view their pensions via their chosen dashboard.

This procurement process is a significant milestone, as the chosen supplier will provide the major components of the digital architecture, including the pension finder service (PFS), the consent and authorisation service, and the governance register.

The tender submission deadline ends on the 28 May 2021.

HMT produces guidance on indexation on public sector pensions

In April, Her Majesty’s Treasury (HMT) produced guidance on the indexation of public sector pensions and an updated direction on the indexation of GMP. This continues existing provisions and has been extended to include those public sector scheme members reaching SPA from 6 April 2021.

TPR updates cross-border schemes guidance following the end of the Brexit transition period

TPR has updated its guidance for UK cross-border occupational pension schemes and UK employers that are contributing to occupational pension schemes established outside the UK. The changes relate to the duties on a UK employer using a non-UK occupational or personal pension scheme to comply with their statutory AE duties.

Backto60 refused permission to appeal

An appeal against state pension age changes for women born in the 1950s has been denied by the Supreme Court as the “group had failed to bring the claim within the limited time periods”.  Therefore it was dismissed.

Backto60 campaigns against inequality and unfair treatment of women born in the 1950s who have experienced changes to their state pension age and were asking the government to restore the affected women’s pension age to 60.