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 paper setting out what Scottish independence would mean for social security, pensions and helping people into work
- FRC issues its Plan and Budget for 2014/2015
- HMRC publishes updated guidance on Budget changes
- TPR publishes first automatic enrolment section 89 report
DWP publishes paper setting out what Scottish independence would mean for social security, pensions and helping people into work
According to the latest paper in the DWP’s Scotland analysis series, “the broad shoulders of the UK help to spread risks and pool resources to provide greater certainty and security for people in Scotland”.
In relation to pensions, the DWP’s press release states that, “Over the next 20 years, an independent Scotland would face additional social security costs rising to around £1.55 billion per year as a result of an ageing population and the policy commitments of the current Scottish government. That’s the equivalent of around £450 for every working age person, every year.
As people live longer the costs of providing pensions and benefits are predicted to go up and these costs are better absorbed by the bigger, more diverse UK economy – with more taxpayers and less reliance on oil revenues – than an independent Scotland.
Currently spending on pensioners is proportionally higher in Scotland than the UK average. Over the next 20 years, the proportion of pensioners in Scotland is expected to increase faster than the rest of the UK.”
FRC issues its Plan and Budget for 2014/2015
On 22 April 2014, the FRC issued its Plan, Budget and Levies for 2014/2015. The Plan confirms the FRC’s mission, highlights progress on its three year strategy for 2013-16 and sets out its priorities and projects for the current year.
In relation to pensions, its plans include engaging with the DWP and other regulators on the implications for Technical Actuarial Standards of the pensions reforms announced in the 2014 Budget (for details, please see our Alert).
The FRC’s pension levy (which funds work on actuarial standards and regulation) will be allocated to schemes on the basis of their latest scheme returns to TPR. The rate implemented for 2013/14 will be maintained, giving a levy of £2.55 per 100 members.
HMRC publishes updated guidance on Budget changes
On 27 March 2014 the government announced it would bring forward legislation in the Finance Bill 2014 to ensure that people do not lose their right to a tax-free lump sum if they would rather use the new flexibility this year or next (for details, please see our Alert), instead of buying a lifetime annuity.
On 9 April 2014, HMRC issued guidance to help people who want to use the new flexibility. This information was updated on 24 April 2014. It is for people who have:
- received a tax free lump sum after 27 March 2014
- received a tax-free lump sum on or before 27 March 2014, and either cancelled an annuity contract within the cooling-off period on or after Budget day (19 March 2014) that was linked to that lump sum or have not yet decided how to access the rest of their pension savings.
The guidance details whether or not the unravelling of actions that were taken shortly before the Budget changes were announced will give rise to a tax charge.
TPR publishes first automatic enrolment section 89 report
On 24 April 2014 TPR published its first automatic enrolment section 89 reportwhich highlights key lessons to help employers avoid non-compliance.
The report sets out problems experienced by Dunelm Soft Furnishing Ltd (Dunelm) and the action taken by TPR. Dunelm is now compliant with its automatic enrolment duties.
TPR wants other employers to learn from the Dunelm’s experience and avoid compliance risks. Key lessons include:
- An employer who is experiencing challenges in meeting their automatic enrolment duties should contact TPR to discuss their situation.
- Sound corporate governance is essential to ensure that registration with TPR is completed accurately and on time.
- Payroll systems should be tested well in advance of the staging date to ensure they are able to fulfil the requirements of automatic enrolment.
- Smooth handover and consistency should be maintained in the event of key staff changes to ensure an employer achieves compliance with their duties on time.
Executive director for automatic enrolment, Charles Counsell, urged all employers to take heed from the lessons learned here in order to avoid the same pitfalls.
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