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

• GAD publishes newsletter on managing risks in public service pension schemes
• HMRC announces extension of transitional period in relation to VAT
• HM Treasury publishes consultation on Pensions Advice Allowance
• House of Commons Library: Briefing papers on the new State Pension
• Pensions Ombudsman Service: change of name

GAD publishes newsletter on managing risks in public service pension schemes

On 30 August 2016, GAD published “Managing risks in public service pension schemes: thoughts on measures and control mechanisms”. The document provides details of the Government Actuary’s thoughts on appraising long term risks for public sector pension schemes, as set out in GAD’s July 2016 newsletter.

This follows the National Audit Office’s publication of a report on public service pensions (one of a series of reports picking out significant elements of the Whole of Government Accounts).

HMRC announces extension of transitional period in relation to VAT

On 5 September 2016, HMRC published Brief 14 (2016) in relation to the deduction of VAT on pension fund management costs following the Court of Justice of the European Union decision in PPG (“the Brief”).

The Brief announces a 12 month extension to the current transitional period, which was due to end on 31 December 2016. This means that VAT treatment outlined in VAT Notice 700/17: Funded Pension Schemes may now be used until 31 December 2017. HMRC states that “towards the end of this period” it will review the position and “consider the need for a further extension if necessary”.

For those employers who have already made changes to their structure and/or contractual arrangements to comply with the judgment in the PPG case and HMRC’s various updates, the Brief notes that, provided the employer and scheme trustees agree and both apply the same treatment, they may continue with those arrangements. It also confirms that, if they wish, they may choose to revert back to the previous treatment during the transitional period.

HM Treasury publishes consultation on Pensions Advice Allowance

On 30 August 2016, HMT issued a consultation seeking views on the Government’s plans to allow people to use £500 tax free from their DC pension pots to pay for regulated retirement advice. This measure was recommended by the Financial Advice Market Review (“FAMR”), which suggested that high quality financial advice can have a significant impact on retirement incomes if received early. The intention to consult was then announced in the 2016 Budget.

The consultation sets out the Government’s preferred design for this allowance, which would be introduced from April 2017, and invites comments on its design, as well as on a number of outstanding policy questions. Among other things, it seeks views on details including the eligibility age, whether multiple uses of the allowance should be permitted, and how best to promote awareness of the allowance.

Responses to the consultation should be submitted by the end of 25 October 2016.

The House of Commons Library paper on Pension Wise: the guidance guarantee has been updated to mention this new consultation.

House of Commons Library: Briefing papers on the new State Pension

On 30 August 2016, the House of Commons library issued a briefing paper on transitional issues arising from the introduction of the new State Pension in April 2016 and the abolition of DB contracting-out.

Among other things, the paper looks implementation of the new State Pension, issues to deal with past contribution records – for example in relation to individuals who had already built up more than the full amount of the New State Pension in April 2016 and those who had been contracted-out of their workplace pension on a DB basis.

A second briefing paper published on the same day looks at the background and development of the proposals for the single-tier State Pension.

A further briefing paper published on 2 September 2016 examines the current policy on uprating the State Pension and Pension Credit, including discussion of the “triple lock” mechanism.

Pensions Ombudsman Service: change of name

On 31 August 2016, the Pensions Ombudsman Service announced that it had changed its name to The Pensions Ombudsman (“TPO”).

The new name is designed with the intention of being in line with TPO’s main partner organisations, TPR and TPAS, and aims to “provide clarity for the public when they look for advice, guidance and resolution of pension complaints”.

Anthony Arter, the Pensions Ombudsman, said: “This name change will help to simplify what is a muddled and unnecessarily complicated customer journey when it comes to pensions related disputes. By adopting a similar branding style to that of our partner organisations, the public will be clear on who to approach if they have a pension problem.”