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

• LTA increase confirmed
• FCA highlights developments in pensions savings and retirement income sector
• HMRC guidance for members on allowances when flexibly accessing pension
• Consultation launched to strengthen LGPS pension protection
• GMP equalisation industry group established
• PPF updates insolvency guidance
• WPC launches inquiry into charging for DB transfer advice

LTA increase confirmed

On 10 January 2019, the Finance Act 2004 (Standard Lifetime Allowance) Regulations 2019 were made. The regulations confirm the increase in the standard LTA from £1,030,000 to £1,055,000 with effect from the start of the 2019/20 tax year.

The increase is in line with the rise in CPI (for the 12 months to the end of September 2018). The LTA is currently set to continue to rise in future years in line with annual CPI increases, with the figure to be confirmed each year in regulations.

FCA highlights developments in pensions savings and retirement income sector

On 10 January 2019, the FCA published its Sector Views 2019 , which provides its “annual analysis of the changing financial landscape, the resulting impacts on consumers and market effectiveness”, which will feed into the FCA’s forthcoming Business Plan.

Chapter 5 of the report reviews key developments in the pensions savings and retirement income sector. Amongst other things, it notes the decline in the number of consumers choosing to use financial advice, an increase in the number of pension scams, and poor value or unsuitable products leading to poor outcomes, as areas for concern.

HMRC guidance for members on allowances when flexibly accessing pension

On 11 January 2019, HMRC published guidance for members on the money purchase annual allowance, alternative allowances, and paying tax on pension savings.

Consultation launched to strengthen LGPS pension protection

On 10 January 2019, MHCLG launched a consultation on proposals aimed at strengthening “the pensions protections that apply when an employee of [an LGPS] employer is compulsorily transferred to the employment of a service provider.”

The proposed amendments to the LGPS Regulations 2013 would, in most cases, give transferred staff a continued right to membership of the LGPS. Staff would no longer be able to be offered transfers into a broadly comparable private pension scheme. These changes are intended to bring the LGPS in line with the government’s October 2013 Fair Deal guidance that applies in relation to transfers from central government.

The consultation also puts forward proposals around mergers and takeovers of LGPS providers.

The consultation closes on 4 April 2019.

GMP equalisation industry group established

A new industry group has been formed to help pension schemes following the High Court’s ruling on equalising benefits for the effect of GMPs in the Lloyds case. The group, headed by PASA, aims to “help develop and promote best practice on issues arising from the ruling”.

David Fairs, Executive Director of Regulatory Policy, Analysis and Advice at TPR, said “delivering GMP equalisation will be challenging and we welcome this initiative to bring clarity to the market. It will take some time to work through all the issues. Establishing best practice will help industry do this as efficiently as possible, and minimise disruption to routine scheme business.”

PPF updates insolvency guidance

The PPF has published updated guidance on insolvency issues. Alongside its General guidance for insolvency professionals, the “Restructuring and Insolvency team specific guidance” includes notes on:

• the PPF’s legal standing and approach to the governance of insolvency proceedings
• insolvency practitioner remuneration
• pre-packaged administrations
• potential legal actions contemplated by insolvency practitioners (including how the PPF will view a defence to legal action)
• assessing company voluntary arrangements
• how “PPF drift” arises and should be addressed
• appointment of independent trustees

Guidance on situations involving new or successor schemes is due to be issued during the first quarter of 2019.

WPC launches inquiry into charging for DB transfer advice

On 7 January 2019, the Work and Pensions Committee launched an inquiry seeking evidence on “contingent charging” (ie where a fee for advice is only paid when a transfer goes ahead) in relation to DB pension transfers. This follows its inquiry into pension freedom and choice, and its work relating to the British Steel Defined Benefit Pension Scheme (“BSPS”), which resulted in the WPC calling for a ban on contingent charging.

In October 2018, the FCA had concluded that contingent charging was not the main driver of poor outcomes for customers, but that it would keep pension transfer advice generally under review. Rt Hon Frank Field MP, Chair of the WPC, said that the FCA now welcomes “the Committee’s help to find out more”.

Evidence and comments should be submitted by 31 January 2019.