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

• FCA publishes latest retirement income market data
• Parliament: Single Tier State Pension – latest news from the Commons’ Select Committee inquiry
• Parliament: MPs debate the impact of the equalisation of State Pension Age on women
• Parliament: Briefing paper on the recognition of polygamous marriages in the UK
• PPF appoints two new non-executive Board Members
• TPAS launches new pension scams campaign
• TPAS launches survey on women and pensions
• TPR publishes draft prosecution policy document
• TPR publishes standard form letter for cross-border schemes reclaiming withholding tax
• TPR: Auto-enrolment looms closer for small and micro employers
• PO: Lennon vs South Eastern Education and Library Board (“SEELB”) (Pensions Ombudsman, 25 November 2015) (PO-7511)

FCA publishes latest retirement income market data

The FCA collects data from retirement income providers in order to track and monitor changes in the market.  On 7 January 2016, it published a report on retirement income market data for the period July – September 2015.

The report looks at various elements of the retirement income market, including the choices made by consumers accessing their pensions, the levels of pension withdrawals for customers making a partial withdrawal, the use of regulated advisers and consumers’ stated use of Pension Wise, and whether consumers change providers when accessing their pensions.

The FCA uses this information to help shape the way in which it regulates the market, supervises firms and to inform its planned work.

Consumer choices

The FCA’s report reveals that 178,998 pensions were accessed during the period, in which:

• 34% used UFPLS (both partial and full withdrawals)
• 30% used income drawdown (both partial and full withdrawals)
• 13% were used to purchase an annuity
• 23% were full withdrawals using small pot lump sum payments.

Use of regulated advisers and Pension Wise

The report also shows that customers’ use of regulated advisers differs across each product type and by pension pot size. The highest levels of adviser use were seen by customers going into drawdown (58%). Across all products and withdrawals, consumers with larger pots were more likely to have used a regulated adviser.

On average, 17% of consumers told their provider that they had used Pension Wise. This increased to 22% of consumers with small pots where the use of regulated advice is lower.

Provider choice

Most customers who accessed their pensions during the period stayed with their existing provider, including:

• 58% of consumers going into drawdown
• 64% of consumers purchasing annuities.

Parliament: Single Tier State Pension – latest news from the Commons’ Select Committee inquiry

Back in October 2015, an inquiry into “Understanding the new State Pension” was launched by the House of Commons Committee for Work and Pensions (see 7 Days dated 2 November 2015) owing to concerns that many of those who will be affected by the introduction of the single-tier state pension do not know enough about the changes or exactly what they will mean for their pensions.

The focus of the inquiry is on the way in which changes to the state pension have been communicated, including the extent to which communications have addressed the concerns of specific groups and the degree to which state pension communications have been adequate, consistent and accurate.

The Committee has already received written and oral evidence from a number of key figures in the pensions industry, including the former Pensions Minister, Steve Webb.

In an urgent interim report published today (11 January 2016), the Committee notes that it has heard evidence of a widespread lack of awareness among individuals about what they will receive and when. It also notes that statements intended to rectify this were “confusing and lacked necessary information” and goes on to say that the Committee has received “alarming evidence about the lack of notice and information provided to women about their state pension age”.

The Committee makes a number of recommendations for immediate changes to DWP pension statements, including that:

• statements should be limited to one page in length
• key messages should be highlighted to ensure they stand out clearly
• statements should prioritise the current value of state pension built up, SPA and the date that age will be reached, and how to build up additional benefits
• SPA should be highlighted in a prominent position, especially for those whose pension age has changed
• means of getting further information (eg full NI history, details and calculations of the new state pension starting amounts and calculations of deductions for periods of contracting-out) should be clear and readily available.

The interim report includes an example of the statements currently being issued by the DWP, together with a suggested alternative format produced by the campaign group “Women Against State Pension Inequality” (WASPI).

The Committee’s next main report is expected to examine these and other aspects of the inquiry more closely. A further session of oral evidence is due to be held on 18 January 2016.

Parliament: MPs debate the impact of the equalisation of State Pension Age on women

On 7 January 2016, MPs debated a backbench motion that the Government should introduce transitional arrangements immediately for those women negatively affected by the equalisation of SPA.

Since 2010, the SPA for women (which had historically been age 60), has been changing to bring it into line with the SPA for men (age 65). Changes to the Pensions Act 1995 set out the detail, providing that women born between 6 April 1950 and 5 December 1953 will have an SPA between the ages of 60 and 65. (There are also plans to increase SPA for both men and women, which were accelerated under the Pensions Act 2014 – see our Alert for details.)

All those present at the debate (158 MPs) voted in favour of the motion. However, as a backbench motion, the vote is not binding on the Government and it remains to be seen whether the Government will take steps to address the issue.

Parliament: Briefing paper on the recognition of polygamous marriages in the UK

The House of Commons’ Library has published a briefing paper which deals with the recognition of polygamous marriages, immigration issues, social security benefits and state pension entitlement.

In order to be recognised as valid, all marriages which take place in the UK must be monogamous and must be carried out in accordance with the requirements of the relevant legislation.  For a polygamous marriage to be considered valid in the UK, the parties must be domiciled in a country where polygamous marriage is permitted, and must have entered into the marriage in a country which permits polygamy.

A wife in a polygamous marriage does not generally have the right to a state pension on the basis of her spouse’s contributions but may do so in certain limited circumstances.

PPF appoints two new non-executive Board Members

The PPF has today (11 January 2016) announced that Kate Jones and Rosemary Hilary will be joining its board as non-executive members in January and February 2016 respectively.

The PPF’s press release notes that: “Kate Jones has extensive experience in senior front office asset management roles at Blackrock, Schroders and M&G. She began her career at M&G where she held the position of Fixed Income / LDI Portfolio Manager. She was responsible for growing Barclays Global Investors market-leading LDI business through building and leading the Portfolio Management function. She currently runs her own consultancy and executive coaching firm.”

It goes on to say that: “Rosemary Hilary has a wealth of experience gained from her career in audit, risk and financial services regulation. She is currently Chief Audit Officer at TSB. Before that she held a number of senior regulatory roles at the Financial Services Authority and then the Financial Conduct Authority. Rosemary has been a Trustee of the Board of Shelter, the national homelessness charity, and is also a member of the MBA Advisory Board at Cass Business School.”

TPAS launches new pension scams campaign

On 8 January 2016, TPAS launched a new campaign which aims to help pension savers identify the warning signs of a scam, know where to go for help and guidance and what to do next if they think they have fallen victim to a scam.  TPAS hopes that “by raising awareness of this potentially devastating issue, pension savers can make sure that their plans for later life are scamproof, ensuring that their financial future is protected.”

Michelle Cracknell, Chief Executive of TPAS said: “We know that scammers will target anyone at any time, but the period after Christmas when money is a little tight, is a prime time for people to be contacted out of the blue with unrealistic offers of fast cash.  It’s important that we keep highlighting to consumers the best way to protect their pensions from these opportunists and raise consumer awareness of pension scams. The campaign launching today will continue to improve people’s knowledge of scams, what a scam looks like and how it might impact their later life, should they fall victim. We urge anyone to get in touch with us on 0300 123 1047 if they aren’t sure what they’re being offered, it’s better to be safe than sorry.”

The TPAS campaign will be shared across all social media channels and supported by members of Project Bloom, the multi-agency campaign aimed at preventing pension scams. The new campaign can be followed on Twitter @TPASNews and @TPRgovuk or through the #protectyourpension.

TPAS launches survey on women and pensions

Every three years, TPAS carries out research on the impact of changes in pension saving and the impact that such changes have on women as pension savers.

Whilst previous TPAS surveys have focused on knowledge, the latest survey (launched on 5 January 2016) looks more specifically at women’s attitudes, beliefs and rationale for financial decision making.

Although the survey focuses on women and pensions, TPAS is aware that many factors highlighted in the survey which influence saving among women, such as career breaks and caring responsibilities, can affect anyone.  TPAS therefore welcomes views from anyone wishing to complete the survey.

TPAS will use the results of the survey to understand what women need from the pensions world to help them plan their pension provision confidently. The survey can be accessed by clicking here.  

TPR publishes draft prosecution policy document

TPR published a draft prosecution policy for consultation on 8 January 2016. The policy will be of potential relevance for anyone who could be subject to criminal proceedings by TPR.

As TPR notes, there are a number of criminal offences concerned specifically with workplace pensions. By way of example, these include failure to comply with automatic enrolment duties, providing false or misleading information and acting as trustee while prohibited or suspended.  TPR has the power to prosecute these offences, as well as other offences that form part of the same facts or events or are otherwise connected to its enforcement powers. The draft policy explains how TPR will use its powers.

The consultation closes on 19 February 2016.

TPR publishes standard form letter for cross-border schemes reclaiming withholding tax

On 4 January 2016, TPR published a standard form letter for use by cross-border occupational pension schemes (known as “IORPs” or “Institutions for Occupational Retirement Provision”) in relation to withholding tax claims.

The letter is designed to be submitted to an overseas tax authority in support of a scheme’s claim for the repayment of withholding tax. It can be provided by TPR in response to a request for confirmation as to whether a particular UK occupational pension scheme is required to comply with the Pensions (or IORP) Directive and whether it is subject to regulation in the UK in accordance with the Directive.

The letter explains that TPR is unable to provide individual confirmations for any scheme, but goes on to set out details of the procedure in the UK for registering a pension scheme with both HMRC and TPR. TPR notes that this information should be sufficient confirmation for the overseas tax authority’s purposes. However, should the overseas tax authority need further evidence that a scheme is registered as an occupational pension scheme on the UK register, TPR explains that the authority can ask for information from the scheme itself, such as:

• the scheme’s annual levy invoice
• an extract from the scheme return and
• a screen print of TPR’s online registration overview page for the individual scheme.

TPR: Auto-enrolment looms closer for small and micro employers

TPR expects up to half a million small and micro employers to become subject to automatic enrolment during the course of 2016 and has written to all of these employers to alert them to their start date and to remind them to act.

TPR is concerned that a minority of smaller employers may leave things too late and consequently struggle to comply on time. As TPR Executive Director for automatic enrolment, Charles Counsell, explains, TPR is “helping employers avoid this by alerting them in good time to their duties and giving them the tools they need to meet them. Employers should start planning 12 months before their duties start and make our website their first port of call.”

This call to action coincides with the reappearance of the character “Workie” in the DWP’s television campaigns which are aimed at ensuring no-one ignores the workplace pension message.

PO: Lennon vs South Eastern Education and Library Board (“SEELB”) (Pensions Ombudsman, 25 November 2015) (PO-7511)

The PO held that a complaint by Mrs Lennon could not proceed because it had been brought outside the three year time limit.  The PO considered that it would not be appropriate to exercise his discretion to extend those time limits in all the circumstances, including the fact that any remedy granted would not have been available to Mrs Lennon in the courts.

For further detail, please see our case report.