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

• DWP Annual Report and Accounts 2015/16
• EIOPA publishes final advice on development of Pan-European Personal Pension product
• IFoA report calls for new approach to assessing retirement income adequacy
• Call for evidence on the evolution of NEST
• NEST Annual Report and Accounts 2015/16
• Pensions Ombudsman Service Annual Report and Accounts 2015/16
• PPI publishes report on future trends in pensions tax relief
• TPR publishes final notice and warning on transfers out
• National Scams Awareness Month
• TPAS Annual Report and Accounts 2015/16
• TPR Annual Report and Accounts 2015/16

DWP Annual Report and Accounts 2015/16

On 7 July 2016, the DWP published its Annual Report and Accounts for 2015/16. The report details the DWP’s performance against its strategic objectives, its objectives for the year ahead, and its financial position and results for the year.

EIOPA publishes final advice on development of Pan-European Personal Pension product

On 6 July 2016, EIOPA published its final advice on the creation of a standardised pan-European Personal Pension Product (“PEPP”).

The advice completes a call for evidence issued by the EU Commission in July 2014 on how the EU framework for personal pensions could be developed. It follows an initial consultation conducted between July – October 2015 and a related survey run in November 2015.

In its advice, EIOPA confirms its view that a standardised PEPP “has the best potential to promote the Single Market and to strengthen the regulatory framework for the benefit of protection of consumers”, and that it is “a safe, transparent and cost-effective long-term retirement savings product” which should enable additional pension savings.

It is now up to the EU Commission to review this advice and consider how it wishes to proceed.

IFoA report calls for new approach to assessing retirement income adequacy

The IFoA launched a report on 11 July 2016 entitled “Assessing adequacy of retirement income: a bottom-up approach.”

The report sets out the case for a new approach to retirement saving, where the focus is on retirement income goals rather than the proportion of earnings contributed. The aim is to increase savers’ engagement and help them turn their savings into an adequate income to last throughout their retirement. The report recommends the creation of new tools to help savers assess the adequacy of their savings and plan for their retirement, and the development of “an effective communication strategy across regulators, Government and industry that is tailored to individual needs rather than a one-size-fits-all approach”.

Gareth Connolly, Chair of the IFoA Pensions Board, commented, “We hope that this report will go some way to assisting Government, regulators and industry in putting together a communications and planning framework that works for savers so they can plan adequately for their own retirement goals. Taking an outcomes based, or ‘bottom up’ approach to retirement saving should help savers understand how close they are to reaching their goals, and what steps they would need to take to ensure an adequate retirement income if they are falling short of their goals.”

Call for evidence on the evolution of NEST

On 7 July, the DWP issued a call for evidence on the evolution of NEST.

The consultation asks whether NEST’s remit needs to “better reflect recent changes to the pensions landscape”, including the introduction of pension freedoms and the new State Pension, in order to meet the needs of its three million members. It seeks view on areas in which the NEST framework might be adapted, including new ways for members to access their pension savings, and the possible expansion of the scheme to enable individuals, employers and other schemes to access NEST’s services.

The consultation closes on 28 September 2016.

NEST Annual Report and Accounts 2015/16

On 7 July 2016, NEST Corporation published its annual report and accounts for 2015/16, along with the annual report and accounts 2015/16 for the NEST pension scheme.

As at the start of July 2016, NEST’s membership stood at over three million members, with £970m assets under management (up from £420m in 2014/15).

Pensions Ombudsman Service Annual Report and Accounts 2015/16

The PO Service also published its Annual Report and Accounts for 2015/16 on 7 July 2016. Among other statistics, the report notes that:

• the service handled around 5,000 enquiries (18% more than in 2014/15) and completed 35% more cases than in the previous year
• 63% of cases were resolved informally by adjudicators, and 37% formally with a full PO decision
• around 40% of cases formally decided were upheld or partly upheld
• pension liberation cases accounted for 20% of all completed investigations.

The Pensions Ombudsman, Anthony Arter, commented that there had been “a marked increase in the number of pension complaints coming to our office… Our priority in the past year was to find ways to deal with complaints more efficiently while at the same time simplifying the wider customer journey. Changes to our internal processes and a focus on dialogue and early resolution are helping us to deliver this.”

PPI publishes report on future trends in pensions tax relief

The PPI published a report on 6 July 2016, commissioned by The Resolution Foundation, analysing the impact of a number of potential reforms to the tax and NI relief system.

The report sets out the impact that the potential policy reforms might have on the projected cost to the Exchequer, the impact upon particular individuals and how the impact could be spread across the retirement savings population. It also explores the case for change and the potential implications of specific options for reform, following the consultation on reforming tax relief on pension contributions in the Summer Budget 2015.

TPR publishes final notice and warning on transfers out

TPR published a final notice, on 5 July 2016, confirming the appointment of an independent trustee, Dalriada Trustees Limited, to the London Quantum Retirement Benefit Scheme following concerns about its governance. TPR found that the original trustee had a “serious disregard to the obvious risks that members might be misled about the true nature of the investments held by the scheme and the risks that came with those investments”.

TPR issued a press release at the same time to all savers, warning them to be vigilant when considering transferring their existing pension to another arrangement. In the case of the London Quantum Scheme, it revealed that approximately £5,800,000 of members’ accrued pension savings had been put at risk, having been transferred to that scheme between August 2014 and May 2015.

Nicola Parish, Director of Case Management at TPR, said: “This case should act as a reminder to all savers, pension scheme trustees and administrators to remain alert to the dangers of transferring pension savings in order to access unrealistically high returns often associated with exotic sounding investment opportunities.”

National Scams Awareness Month

July saw the launch of National Scams Awareness Month – a joint initiative run by Citizens Advice and Trading Standards, and supported by TPR and TPAS.

The initiative is designed to raise public awareness of a range of common scams, including pensions and investment scams.

TPR’s statement notes in particular that Project Bloom, the multi-agency taskforce aimed at preventing pension scams, remains “concerned about SSASs (small self-administered schemes) being used by scammers who are exploiting this type of scheme’s lighter legislative and regulatory framework. We strongly advise consumers against investing in this kind of esoteric pension scheme without taking advice first from a financial adviser authorised by the FCA”.

TPAS Annual Report and Accounts 2015/16

TPAS published its Annual Report and Accounts for 2015/16 on 8 July 2016.

The service handled nearly 178,000 direct customers over the year, up from 103,000 in 2014/15, with 2.7 million visitors to its website.

TPR Annual Report and Accounts 2015/16

TPR published its Annual Report and Accounts for 2015/16 on 7 July 2016.

TPR Chief Executive Lesley Titcomb said: “Our Annual Report shows the progress we’ve made in work to improve the knowledge, understanding and effectiveness of trustees, and in the successful implementation of automatic enrolment, which is achieving compliance rates at the high end of expectations”.