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:

Changes to TUPE come into force
NEST warns employers to “mind the gap”
PPI issues Briefing Note 65 – Defined Ambition in Workplace Pension Schemes
TPR publishes DC Trust 2014
PPF v The Trustees of the West of England Ship Owners Insurance Services Limited Retirement Benefits Scheme (High Court)

Changes to TUPE come into force

Changes have been made to the TUPE regulations, which protect the employment terms and conditions of employees who are transferred from one organisation to another. The amendments are intended to make sure both employers and staff are treated fairly when a TUPE transfer takes place. The amendments came into force today, 31 January 2014.

NEST warns employers to “mind the gap”

New findings released by NEST on 28 January 2014 show that employers staging in 2014 have three fundamental gaps to deal with as they meet their automatic enrolment challenges:

The experience gap – around a third of 2014 employers are likely to either not offer any pension scheme at all or just have a shell stakeholder scheme in place, while all 2013 employers had offered a pension. Only around half (52 per cent) said that they had a good understanding of pensions compared with 96 per cent of earlier stagers.
The knowledge gap – the research suggests that not only do some employers lack knowledge about pensions, but they haven’t engaged with the detail of the reforms. For example, only 53 per cent of employers staging between February and July 2014 are aware that they can postpone enrolments for up to 3 months, with only 12 per cent planning to do so. This compares with around half of 2013 stagers applying a waiting period. The employers NEST interviewed found it difficult to map out the process they intended to follow as they had limited knowledge of the details of the reforms.
The reality gap – results from TPR’s latest tracking survey with employers found that only one in 10 employers staging in 2014 say they plan to leave it as late as possible to comply. This plan to be ahead of their deadline is at odds with the insight that only 23 per cent of employers staging between February and July 2014 have both confirmed the provider they will use and that they have done everything else they need to do in order to be ready to comply. This suggests that employers are not getting the message that they need to plan ahead, and are underestimating how much work is involved and how long implementation may take them.

NEST warns that, compared with their predecessors, second year employers may not be engaging enough with the detail of the reforms in order to successfully manage their duties.

PPI issues Briefing Note 65 – Defined Ambition in Workplace Pension Schemes

On 29 January 2014, the PPI published Briefing Note 65 – Defined Ambition in Workplace Schemes.

This briefing note discusses the possible impact of some of the Government’s DA pensions proposals for DB scheme members. It also assesses the DA pensions options based on a DC pensions structure.

For details of the Government’s proposals please see our Alert.

TPR publishes DC Trust 2014

On 29 January 2014 TPR published its latest snapshot of occupational trust-based DC pensions in the UK.

This year’s release covers around 40,000 DC schemes and includes data such as memberships and assets spanning the past five years; 2009 to 2013 (all figures as of 31 December in the relevant year).

Headline findings include:

There are £30 billion of assets in DC schemes with 12 or more members.
The number of DC memberships has increased by 14% over the last year, from 2.2 million to 2.6 million.
The number of DC master trust schemes with 12 or more members has increased by 11% (from 44 to 49), and the membership of such schemes has increased by 50% (from 250,000 to 380,000 members).
DC memberships now account for 30% of workplace pensions memberships – up from 27% last year.
The proportion of members aged 50 or above has remained stable at 24%.
The average size of pension transfers is £30,000.
The average pot size at retirement is £25,000.

It is important to note that the data does not fully reflect the volume of new memberships into DC schemes as a result of automatic enrolment – due to the staggered dates that schemes complete their scheme returns to TPR.

PPF v The Trustees of the West of England Ship Owners Insurance Services Limited Retirement Benefits Scheme (High Court)

The trustees of the West of England Ship Owners Insurance Services Limited Retirement Benefits Scheme disputed the employer’s failure score with the PPF.

The method used by D&B to determine the failure score did not take into account the latest accounts of the Luxembourg company. This resulted in its insolvency risk being overstated and the trustees being asked to pay an increased risk based levy.

The High Court held that the PPF did not have discretion to change the score in this case as the levy calculation had been undertaken correctly.

Please click here for a full summary of the case.