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 publishes response to consultation on draft PPF regulations
• FCA publishes discussion paper on effective competition in non-workplace pensions
• HMRC pension schemes newsletter 95 published
• HMRC publishes updated Relief at Source materials
• Sargeant and others v London Fire and Emergency Planning Authority and others
• Lord Chancellor and Secretary of State for Justice v McCloud

DWP publishes response to consultation on draft PPF regulations

On 29 January 2018, the DWP published its response to the consultation on the draft Pension Protection Fund (Compensation) (Amendment) Regulations 2018. The document also responds to the consultation Pension Protection Fund: draft regulations to take account of bridging pensions, which set out various possible solutions, and following which the Government elected to take the “scheme rules” approach forward.

Currently, PPF rules do not take account of anticipated changes in a member’s entitlement after the date when a scheme enters a PPF assessment period. This leaves some members financially better off in the PPF than they would have been under their scheme rules.

Following consideration of all the responses received, the Government decided to “address the PPF bridging pension anomaly by more closely aligning with the approach that schemes would have taken”. The regulations therefore amend the PPF compensation rules to mirror bridging (or “step-down”) pension provisions in admissible scheme rules.

Changes have been made to the original draft regulations in light of respondents’ feedback to the second consultation. The regulations now:

• refer to such arrangements as “step-down pensions”, with only the temporary additional amount a member receives on top of their basic pension entitlement as the “bridging element”
• clarify that the bridging element does not continue past a member’s death
• confirm that a no late retirement uplift in respect of the bridging element will be paid.

The response states that the Government “thinks it prudent to allow the changes made in respect of step-down pensions to bed in fully before seeking to introduce further changes in relation to step-ups and GMPs”. Further consideration will be given to addressing this issue once their enquiries are complete.

The regulations come into force on 24 February 2018, with prospective effect. A commencement order bringing into force enabling provisions in the Pensions Act 2004 (enabling changes to PPF compensation to come into being) was made on 17 January 2018.

FCA publishes discussion paper on effective competition in non-workplace pensions

On 2 February 2018, the FCA published a discussion paper on effective competition in non-workplace pensions.

The discussion papers asks the industry and consumers whether competition is working well in the market for non-workplace pensions, and whether or not there is a need to go further to protect consumers. Among other issues, the paper asks questions relating to product complexity, ease of movement to other products, default funds, and charges.

The FCA states that it uses the term “non-workplace pensions” as an umbrella term to represent individually arranged contract-based DC pensions, most commonly individual or stakeholder personal pensions, or SIPPs.

The FCA is seeking feedback by 27 April 2018. It aims to produce a paper in response to the feedback “towards the end of the year”, to include consultation proposals if the evidence it gathers demonstrates harm to consumers.

HMRC pension schemes newsletter 95 published

Pension schemes newsletter 95 was published by HMRC on 31 January 2018. Among other things, it includes:

• information on relief at source for Scottish Income Tax following measures announced in the Scottish Budget on 14 December 2017, including on the release of notification of residency status reports
• a link to the updated APSS146E application for a certificate of residence or certification of a tax reclaim
• administrative information in relation to the new pensions online service confirmation of HMRC’s information powers in relation to pension schemes.

HMRC publishes updated Relief at Source materials

HMRC has published an updated tax information and impact note (“TIIN”) about changes affecting pension scheme administrators that reclaim tax relief using the Relief at Source method. The TIIN has been updated following recent consultation responses on the draft Registered Pension Schemes (Relief at Source) (Amendment) Regulations 2018, following the introduction of the Scottish rate of income tax.

HMRC has also published new or updated information on:

• checking a pension scheme member’s residency status for relief at source
• how to check whether a member is to be treated as resident in Scotland or in the rest of the UK for relief at source
• completing a registered pension scheme relief at source annual information return
• submitting an annual information return electronically.

Sargeant and others v London Fire and Emergency Planning Authority and others

The EAT has allowed an appeal against the Employment Tribunal’s (“ET”) decision that the transitional protections put in place to minimise the impact of reforms to the Firefighters’ Pension Scheme did not constitute unlawful age discrimination.

The case was run in tandem with one relating to the judicial pension scheme (McCloud & others v Ministry of Justice), given the common background and common issues between the two.

For further information please see our case report.

Lord Chancellor and Secretary of State for Justice v McCloud

The EAT has dismissed an appeal against the Employment Tribunal’s (“ET”) finding that that the transitional provisions put in place as part of the reform of the judicial pension schemes constituted unlawful age and, in some cases, indirect race and sex discrimination.

For further information please see our case report.