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

• Finance (No.2) Bill 2016
• The Pensions Act 2014 (Transitional and Transitory Provisions) Order 2016
• The Public Service Pensions Revaluation (Prices) Order 2016
• The Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2016
• The Occupational Pension Schemes (Scheme Administration) (Amendment) Regulations 2016
• Pensions tax changes from 6 April 2016
• Automatic enrolment: guidance on the alternative tests of scheme quality published
• FRC invites feedback on FRS 102
• PPF releases updated compensation cap factors
• TPR launches refreshed Scorpion campaign
• TPR consults on draft DC compliance and enforcement policy
• Webber v Department for Education (PO) – 2 February 2016

Finance (No.2) Bill 2016

The Finance (No.2) Bill 2016 (“the Bill”) was published on 24 March 2016. It includes measures which were first published draft in December 2015 (see our Alert) as well as new provisions which were announced in this year’s Budget.

On Royal Assent, the Bill will become the Finance Act 2016.

For full details, please see our Alert.

The Pensions Act 2014 (Transitional and Transitory Provisions) Order 2016

The Pensions Act 2014 (Transitional and Transitory Provisions) Order 2016 was made on 21 March 2016, and generally comes into force on 6 April 2016.

The Order makes transitional and transitory provision in connection with the coming into force of Part 1 of the Pensions Act 2014, which creates the new state pension for people reaching pensionable age on or after 6 April this year.

Part 5 of the Pensions Act 2014, which will create a new bereavement support payment for people whose spouse or civil partner dies, will come into force “on such day as the Secretary of State may appoint”. The Order makes transitional provisions so that Part 1 of the Pensions Act 2014 applies correctly for certain cases that arise in respect of the period from 6 April 2016 until Part 5 comes into force.

The Public Service Pensions Revaluation (Prices) Order 2016

The Public Service Pensions Revaluation (Prices) Order 2016 was made on 24 March 2016 and will come into force on 1 April 2016.

The Order specifies the annual percentage change in prices to be applied for the purposes of revaluation required by public sector schemes under the Public Service Pensions Act 2013 over the same period (1 April 2015 to 31 March 2016). The draft Order specifies a decrease in prices of 0.1%, as CPI in the 12 months to September 2015 was negative.

On 23 March 2016, HMT published covering notes and updated multiplier tables in relation to public service pensions for 2016.

The Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2016

The Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2016 was made on 23 March 2016 and will come into force on 6 April 2016.

Following the DWP’s review and analysis of the earnings trigger and qualifying earnings band, the “upper earnings limit” has been set at £43,000 (up from £42,385 in 2015/16), while the lower limit of the qualifying earnings band has been maintained at £5,824. The “earnings trigger” is also being maintained at its current level of £10,000.

The automatic enrolment earnings trigger determines who gets automatically enrolled into a workplace pension, while minimum contributions for automatic enrolment are based on earnings within the qualifying earnings band. The Government reviews both the earnings trigger and qualifying earnings band every year and revises them if appropriate.

The Occupational Pension Schemes (Scheme Administration) (Amendment) Regulations 2016

The Occupational Pension Schemes (Scheme Administration) (Amendment) Regulations 2016 were made on 21 March 2016 and will come into force on 6 April 2016.

These Regulations amend the Occupational Pension Schemes (Scheme Administration) Regulations 1996, and the Occupational Pension Schemes (Investment) Regulations 2005.

Having consulted on draft provisions to create minor changes to ensure that DC pension scheme governance measures work as intended, the DWP published its response to chapter 3 of its “Better Workplace Pensions” consultation on changes to governance provisions on 1 February 2016.

Among other things, the regulations:

• provide an amended definition of a “relevant multi-employer scheme”
• disapply the requirement to appoint a chair of the trustees or managers for certain schemes
• provide for the signing of the annual governance statement in the absence of a chair.

Pensions tax changes from 6 April 2016

Various changes to the pensions tax relief system are on the horizon. On and from 6 April 2016, a number of these will come into force, including the introduction of the tapered AA and the reduction of the LTA to £1 million.

For full details, please see our Alert.

Automatic enrolment: guidance on the alternative tests of scheme quality published

The DWP published guidance on 29 March 2016 in relation to the alternative tests of scheme quality for DB schemes, and the DB elements of hybrid pension schemes, used for automatic enrolment.

The guidance is aimed at helping pension scheme professionals to decide if a DB or hybrid scheme is of sufficient quality to be used for an employer’s automatic enrolment duties.

FRC invites feedback on FRS 102

The FRC is asking stakeholders for feedback on their experiences implementing the new UK and Ireland accounting standards, particularly FRS 102. FRS 102 has applied to accounting periods beginning on or after 1 January 2015, and aimed to provide entities with succinct and EU-standard compatible financial reporting requirements.

Executive Director of Codes and Standards Melanie McLaren said: “We are providing an opportunity, now, for those interested in financial reporting to give feedback as they are preparing their first financial statements complying with the new standards. Providing feedback this year will be an important first stage in shaping the future development of the standards.”

Any comments should be submitted by 31 October 2016. The comments received will be used to inform the development of proposals for changes to accounting standards, which will be subject to formal consultation at a later date, expected to be during 2017, in advance of a planned effective date of 1 January 2019.

PPF releases updated compensation cap factors

The PPF compensation cap is used to determine the level of compensation payable by the PPF to certain individuals. It is subject to an annual review with effect from 1 April to reflect the increase in the general level of earnings in Great Britain since the previous tax year.

On 22 March 2016, the PPF released updated age-specific compensation cap factors. These should be used for calculations of PPF compensation, as well as for valuations under section 143 (used to determine whether a scheme should enter the PPF following an insolvency event) and section 179 (a scheme’s funding position on the PPF basis) with effective dates from 1 April 2016.

TPR launches refreshed Scorpion campaign

On 23 March 2016, TPR unveiled a “refreshed and hard hitting” scorpion campaign to warn of the dangers of pension scams. The campaign has been revamped to be clearer for savers, and includes a short film using true stories of those who have lost their life savings.

Lesley Titcomb, TPR’s Chief Executive, said: “For the first time in the campaign, information on how to avoid a scam is now separate, focussed and specific for pension savers. We’ve also presented clear steps to guide savers on how to protect themselves”.

TPR urges savers to ask TPAS for help and if they suspect they have been scammed to act quickly and let their provider know or call Action Fraud.

TPR consults on draft DC compliance and enforcement policy

On 22 March 2016, TPR published its updated draft DC compliance and enforcement policy for consultation (first issued in November 2013).  The policy is relevant to trustees and scheme managers, as well as those who could be subject to TPR’s statutory powers of investigation and enforcement, such as service providers, employers and professional advisers. The consultation will run until 3 May 2016.

The draft policy incorporates:

• a proposal to broaden TPR’s “proactive approach”
• the new requirements imposed by the Occupational Pension Schemes (Charges and Governance) Regulations 2015
• a proposed mechanism for the calculation of a mandatory penalty for a breach of the requirement to produce a chair’s statement.

Webber v Department for Education (PO) – 2 February 2016

The PO held that the applicable date for limitation purposes in respect of recovery of overpayments should be the date when the scheme first seeks recovery of those payments.

Please see our case report for further details.