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:

• New Legislation
  
• DWP publishes framework for the analysis of future pension incomes
  
• DWP – Government’s ban on consultancy charges in automatic enrolment pensions takes effect
  
• DWP – Government response on the reforms to the Teachers’ Pension Scheme
  
• HMRC updates QROPS forms
  
• HMT updates Equitable Life Payments Guidance
  
• NAPF publishes research on the new generation of DC default funds
  
• NAPF comments on financial tax legal opinion
• NAPF 2013 AGM Season Report
  
• TPAS appoints new Chief Executive
  
• PPF to Recruit New Real Estate Investment Managers
  
• TPR research on Intermediaries rise to automatic enrolment challenge
  

New Legislation

HMRC has published the Registered Pension Schemes and Overseas Pension Schemes (Miscellaneous Amendments) Regulation 2013. Aiming to further strengthen the QROPS regime, these regulations make a number of changes to the rules on tax-free transfers of UK tax-relieved pension savings to pension schemes overseas that meet the requirements to be QROPS.

DWP publishes framework for the analysis of future pension incomes

The DWP has published a framework for the analysis of future pension incomes. It shows that, based on a cautious set of assumptions about changes in future saving behaviour, the Government’s pension reforms will:

• reduce the number of people facing inadequate retirement incomes by 1 million;
• increase the incomes (and replacement rates) of 73% of those facing inadequate retirement income, bringing them closer to their target income; and
• halve the proportion of future pensioners who will retire with no private income at all from 27% to 12% in 2050.

In addition, it provides an overview of projected future retirement incomes, in order to:

• look at the impacts of the Government pension reforms as a whole;
• identify where remaining challenges exist, and for whom, and
• recognise that these are long term challenges and we need to think about them well in advance.

DWP – Government’s ban on consultancy charges in automatic enrolment pensions takes effect

New legislation to ban consultancy charges in DC automatic enrolment schemes came into force on 14 September 2013.

The new law means an employer cannot receive advice under an agreement with a third party, other than a trustee, provider or scheme manager, and pay for that advice out of the members’ pension pots or contributions.

The government also intends to consult in autumn 2013 on whether it should extend the ban to cover a small number of schemes which already had an agreement in place before 10 May 2013 (the date Steve Webb, the Minister for Pensions, announced that he intended to ban consultancy charges).

DWP press release

DWP – Government response on the reforms to the Teachers’ Pension Scheme

This Government response to consultation on implementation of changes to the Teachers’ Pension Scheme summarises the responses to consultation on the reformed Teachers’ Pension Scheme. It provides the government’s response to each issue raised as a result of the consultation and acknowledges respondents wider concerns on the public service pensions reforms. It also confirms the launch of the consultation’s second stage which is seeking views on draft regulations to give statutory effect to the reformed scheme.

HMRC updates QROPS forms

HMRC has updated a number of the QROPS forms to reflect the changes made by the new QROPS regulations (see above). They will be available in the forms area of the HMRC website, for use from 14 October 2013.

HMT updates Equitable Life Payments Guidance

On 10 September 2013, HM Treasury updated its guidance on Equitable Life Payments. It includes information on:

• payments to pre-September 1992 Equitable Life With-Profits Annuity policyholders announced at Budget 2013;
• payments to deceased policyholders; and
• payments to overseas EU policyholders.

NAPF publishes research on the new generation of DC default funds

On 10 September 2013 the NAPF published new research which indicates that DC default funds are reviewing and overhauling their design and governance to deliver good retirement outcomes for members.

The Default Fund Design and Governance in DC Pensions report focuses on eight DC pension schemes that have created, reviewed or improved their default funds – including the Bank of America, Heineken and Trinity Mirror. It highlights 15 default fund design trends, provides 15 practical tips on how to approach default fund design and identifies popular design features in the case studies.

The default fund design trends include:

• a strong focus on driving value for money over lowest cost (with the average member charge being around 50 basis points);
• stripping out investment volatility from the default; and
• white-labelling of funds so that changes can easily be made in future.

Popular design features include:

• longer periods for de-risking;
• more flexible pre-retirement phases; and
• more tailored and engaging communications with members.

NAPF comments on financial tax legal opinion

The NAPF has commented upon the legal opinion prepared for the European council on the FTT.

Joanne Segars, Chief Executive of the NAPF, said:

“The FTT would hurt savers not bankers and would hike costs for many employers struggling with a weak economy while trying to provide a good pension. It would increase the cost of investments, which means lower pensions or higher contributions. That is why the NAPF has long argued that the FTT is not the way to encourage long-term responsible investment.”

NAPF 2013 AGM Season Report

The NAPF has published an analysis of the 2013 AGM Season. This report is the first in what will be an annual monitoring exercise. It will be in addition to the Corporate Governance Policy & Voting Guidelines the NAPF publishes each November.

Joanne Segars, Chief Executive, NAPF, said:

“The good news is that most companies are making efforts to improve the disclosure of their remuneration practices and to ensure their policies are driving appropriate performance. We are also pleased to see that many companies are responding positively to the increasing expectations of investors for Audit Committees to safeguard the independence of the external auditor.

We hope that highlighting the few companies where shareholders have felt compelled to give the company another reprimand will cause them to reflect, listen to shareholder concerns and introduce changes next year. We will continue to keep an eye on them and encourage all companies to assess whether their current remuneration practices align rewards to long-term success and returns to shareholders.”

TPAS appoints new Chief Executive

TPAS has announced that Michelle Cracknell has been appointed as Chief Executive and will take up the post on 1 October 2013.

Michelle joins TPAS having previously worked in the financial services sector for over 25 years specialising in pensions and retirement planning. Her experience ranges from self-administered pensions, final salary and all types of DC pension schemes and she has been involved in communication programmes to employees.

PPF to Recruit New Real Estate Investment Managers

On 16 September 2013, the PPF announced that it is looking to recruit additional real estate investment managers to meet its growing and diverse needs.

As it grows beyond its current £15 billion in assets, the PPF is looking to increase its investments in property through pooled funds in Asia Pacific and Europe and the United States which is why it is recruiting additional managers.

The PPF is looking to appoint a panel of 8-12 managers for a maximum of eight years. It is expected that these contracts will be awarded by the end of March 2014.

TPR research on Intermediaries rise to automatic enrolment challenge

On 10 September 2013 TPR published new research which looks at Intermediaries’ awareness, understanding and activity relating to workplace pension reforms. The research indicates that the vast majority of payroll administrators and accountants now expect to have some involvement with automatic enrolment and that 96% of payroll administrators and 95% of accountants said they anticipate helping clients with their duties.

Other key findings include:

• levels of understanding were lower among payroll administrators (77%), trustees (67%), and lowest among accountants (60%) and bookkeepers (48%), both of whom are more likely to be dealing with employers furthest away from their staging dates;
• most financial advisers had already helped their clients (69% of IFAs and 91% of pensions consultants);
• the main challenges for HR professionals continued to concern cost, while payroll administrators were more concerned about the lack of understanding and their clients’ perception that the reforms were not relevant to their business; and
• awareness and understanding levels remained largely unchanged among both accountants and bookkeepers compared with autumn 2012. Many had already had some form of interaction with their clients about automatic enrolment (62% of accountants and 38% of bookkeepers).

TPR press release.