7 days

7 Days is a weekly round up of developments in pensions, normally published on Monday afternoons. We collate this information from key industry sources, such as the DWP, HMRC and TPR.

In this 7 Days

• Judicial Pensions regulations published
• DWP consults on capping early exit charges and prohibiting existing member-borne commission charges
• DWP consultation: enabling transfers to schemes that have never been contracted-out
• DWP updates guidance
• GAD blog on State Pension Age review
• HMRC updates pension forms
• Insolvency service reports winding up of trustee companies
• ONS analyses money in funded pensions and insurance in the UK National Accounts: 1957 to 2015
• PLSA publishes “Beyond pensions policy: The Government’s approach to lifetime savings”
• PPF publishes updated guidance
• TPR secures first criminal convictions for refusal to provide information
• Thales UK Limited vs Thales Pension Trustees Limited (High Court – 31 March 2017)

Judicial Pensions regulations published

The Judicial Pensions (Amendment) Regulations 2017 were published on 3 April 2017. They amend the Judicial Pensions Regulations 2015, including making changes consequential upon the making of the Judicial Pensions (Fee-Paid Judges) Regulations 2017. The Judicial Pensions (Additional Voluntary Contributions) Regulations 2017 were published on the same date, and provide for the payment of additional voluntary contributions by members of the pension scheme set up under the Judicial Pensions Regulations 2015.

The Judicial Pensions (Fee-Paid Judges) Regulations 2017, published on 6 April 2017, make provision for a pension scheme for the benefit of those people who have held an eligible fee-paid judicial office in the period between 7 April 2000 and 31 March 2015. The Regulations also establish the Fee-Paid Judicial Added Voluntary Contributions Scheme, the Fee-Paid Judicial Added Years Scheme and the Fee-paid Judicial Added Surviving Adult’s Pension Scheme to enable members of the scheme to pay voluntary contributions towards the costs of additional benefits under one or more of these additional schemes.

DWP consults on capping early exit charges and prohibiting existing member-borne commission charges

On 5 April 2017, the DWP published a consultation seeking views on the draft Occupational Pension Schemes (Charges and Governance) (Amendment) Regulations 2017. It is proposed that the regulations will come into force on 1 October 2017.

The draft regulations will introduce restrictions on early exit charges for members of occupational pension schemes who are eligible to access the retirement flexibilities (or so-called “pension freedoms”). Under the proposals, a member who joins an occupational pension scheme before 1 October 2017 will not be able to incur an early exit charge (or combination of charges) which exceeds 1% of the value of the benefits being taken, converted or transferred. Existing early exit charges below 1% will not be able to be increased and new early exit charges cannot be imposed.

The regulations also aim to prevent, from the date of the regulations coming into force, member-borne commission charges being imposed to recover the cost of any ongoing payments in relation to contracts entered into before 6 April 2016. (Member-borne commission has been banned since 6 April 2016 on new arrangements entered into on or after that date).

Payments made before the regulations come into force will not be affected. The draft regulations are intended to align with the FCA’s rules banning commission in workplace personal pension schemes, and therefore do not prevent providers from imposing member-borne charges in order to recover initial commission paid to advisers before the draft regulations take effect (i.e. the ban will not apply to a charge imposed under a contract entered into before 6 April 2016 and paid for before 1 October 2017).

As per the legislation put in place banning member-borne commissions on new arrangements from 6 April 2016, the draft regulations ask service providers to confirm compliance to the trustees or managers of a relevant pension scheme within a specified time period.

The consultation closes on 31 May 2017.

DWP consultation: enabling transfers to schemes that have never been contracted-out

On 10 April 2017, the DWP issued a consultation seeking views on draft regulations to introduce changes to enable transfers, in limited circumstances, of pensioner members with GMP or section 9(2B) rights, with their consent, to schemes that have never been contracted-out.

The draft regulations under consultation – The Contracting-out (Transfer and Transfer Payment) (Amendment) Regulations 2017 – limit the circumstances where these types of transfers take place to where the scheme is undergoing a PPF assessment or where a regulated apportionment arrangement (“RAA”) has been entered into.

The issue of bulk transfers without member consent to schemes that have never been contracted-out is not addressed in this consultation, but is said to remain “under active consideration”.

The consultation period closes on 23 April 2017.

DWP updates guidance

The DWP has published revised versions of various pieces of its guidance in relation to retirement planning and the State Pension, to update them for the new tax year. These include “Your State Pension explained” for those reaching SPA on or after 6 April 2016, “Saving for retirement if you’re aged 16 to 50”, “Retirement planning for current pensioners”, and “Planning for retirement if you’re aged 50 or over”.

The DWP also updated the Contracted Out Pension Equivalent (COPE) factsheet to explain that the COPE amount is based on April 2016 State Pension rates. Out-of-date factsheets have also been removed.

GAD blog on State Pension Age review

On 7 April 2017, the Government Actuary released a blog discussing the current review of SPA, and GAD’s first report in response to this.

HMRC updates pension forms

HMRC has produced updated versions of various documents to take account of the new tax year and recent changes in legislation. These include:

• forms and guidance for members and managers of overseas pension schemes
• various other “Pensions scheme administration” documents, including in relation to members’ tax relief, rates and allowances, and lump sum charges
• information on Self Assessment: Tax return for trustees of registered pension schemes
• guidance notes and advice for pension scheme administrators.

Insolvency service reports winding up of trustee companies

On 6 April 2017, the Insolvency Service reported that two pension companies, which administered and acted as trustees for various schemes, had been wound up in the public interest by the High Court on 28 March 2017.

The court action followed an investigation by the Insolvency Service which found the companies did not market the various schemes but approved a series of high-risk investments which were then offered to the general public through a network of introducers and sub-introducers. The investigation found that the companies failed to adequately carry out their trustee role by neglecting to obtain independent investment advice, failing to comply with their own governance statements and by failing to adhere to pensions legislation and guidance issued by TPR.

ONS analyses money in funded pensions and insurance in the UK National Accounts: 1957 to 2015

The Office for National Statistics (ONS) has published a report based on analysis of the National Accounts to address two questions: how much money there is in funded pensions and insurance in the UK, and how this picture has changed over time. It looks at some of the challenges involved and discusses areas where the ONS hopes to make future improvements in its estimates and data.

PLSA publishes “Beyond pensions policy: The Government’s approach to lifetime savings”

The PLSA has published a document looking at the Government’s approach to encouraging the accumulation of lifetime savings. The report focuses on the Government’s “life cycle model”, and considers the tax-advantaged savings products and other schemes that are intended to promote the growth of financial and property assets at each stage.

PPF publishes updated guidance

The PPF has published updated versions of various guidance documents on 6 April 2017, including actuarial guidance on Section 143 and Section 179 valuations, and its “Additional information for carrying out a section 143 valuation”.

TPR secures first criminal convictions for refusal to provide information

On 6 April 2017, TPR announced that a solicitor and the firm where he is a partner have been ordered to pay more than £16,000 in fines and costs for refusing to give documents to it which were required as part of a wider investigation.

The documents related to a property linked to an individual who was involved in a TPR pension scam investigation. Neither the solicitor nor the firm is connected with this investigation and there is absolutely no suggestion that its staff have done anything wrong in their dealings with the property. However, the requested documents were not provided to TPR despite TPR asking for them for almost nine months.

TPR eventually entered the offices with a search warrant to secure the documents. TPR decided that the failure to hand over the documents was so serious that it merited the criminal prosecution of both the solicitor and his company – the first time TPR has taken such action.

The solicitor and firm pleaded guilty to refusing to provide documents required under the Pensions Act 2004 without a reasonable excuse, which constitutes an offence under the Act.

TPR also announced that the head of a charity had been ordered to pay £6,500 on the same grounds, having refused to provide information to TPR relating to an investigation into unusual scheme investments.

Thales UK Limited vs Thales Pension Trustees Limited (High Court – 31 March 2017)

In this case, Warren J considered whether Thales Pension Trustees Limited, the trustees of the Thales UK Pension Scheme, and Thales UK Limited, the principal employer, had power under the Scheme rules to change the index used for calculating increases from RPI to CPI.

Please see our case report for further details.