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 pension liberation powers in force
• HMRC guidance on Individual Protection 2014 updated
• Pension Schemes Bill: DWP Memorandum on delegated powers
• Pensions disclosure of information requirements: DWP impact assessment opinion
• Thomson v GE Pension Plan / The GE Supplementary Pension Scheme

New pension liberation powers in force

From today (1 September 2014) HMRC has new powers to help it combat pension liberation activity.

Building on a number of recent changes to existing legislation and processes, where HMRC believes that a scheme administrator (generally, trustees) is not a fit and proper person for this role, they can:

• refuse to register a new pension scheme
• de-register an existing registered pension scheme.

HMRC will assume that all persons appointed as scheme administrators are fit and proper persons, unless it holds or obtains information which calls that information into question.  Now when a new pension scheme is registered, the administrator must make a declaration as to their fitness for the role and proper status.

To help trustees and others ensure they can meet this requirement, HMRC has published guidance on the fit and proper person criteria for pension scheme administrators.

HMRC guidance on Individual Protection 2014 updated

The LTA is the total amount of tax relieved pension savings that an individual can build up across all registered pension schemes over their lifetime, without incurring a tax charge.  In April 2014, the standard LTA fell to £1.25 million from £1.5 million.

“IP14” is a new protection which was introduced by the Finance Act 2014.  It allows individuals to protect the value of their pension savings as at 5 April 2014, up to an overall maximum of £1.5 million.  For example, an individual with pension savings of £1.3 million on 5 April 2014 who applies for IP14 will have a personalised LTA of £1.3 million.  But if an individual’s pension savings exceed £1.5 million on 5 April 2014, their personalised LTA will be capped at £1.5 million.

An individual’s personalised LTA will not increase unless the standard LTA increases to a level which exceeds it, at which point the individual would revert to the standard LTA.

HMRC has now updated its guidance on IP14 to reflect the final legislative references and some comments received during consultation.

Applications for individual protection 2014 can be made online only until 5 April 2017.

For more information, please see our Alert: Individual Protection 2014.

Pension Schemes Bill: DWP Memorandum on delegated powers

The Pension Schemes Bill, which is currently before Parliament, sets out a new legislative framework for private pensions, with the aim of enabling greater risk sharing between employers, individual members and third parties.  One of the main purposes of the Bill is therefore to allow for the introduction of Collective DC arrangements (“CDC”).

The DWP has published a memorandum on “delegated powers” under the Bill.  Delegated legislation (also known as “secondary legislation”) is usually concerned with detailed changes to the law made under powers in an existing Act of Parliament.  Delegated legislation allows the Government to make changes to the law without a new Act of Parliament.  It is used in circumstances where it is considered inappropriate for Parliamentary time to be spent on every detailed provision during the passage of the Bill and also to reflect the fact that the content of such provisions may change from time to time.

The Bill will set out the overall legislative framework for CDC arrangements and also make other changes to pensions legislation, such as introducing new categories of pension scheme.  In its memorandum, the DWP makes clear that the provisions of the Bill will be supplemented by more detailed regulations and explains:

• the purpose of the delegated powers proposed
• why the particular issues are being dealt with in delegated legislation
• the nature and justification for the parliamentary procedures proposed.

Pensions disclosure of information requirements: DWP impact assessment opinion

Revised disclosure regulations came into force on 6 April 2014 which are designed to consolidate and simplify earlier provisions (see our Alert: Changes to disclosure requirements from 6 April 2014).

The DWP’s Regulatory Policy Committee has now published an impact assessment opinion on the consolidation of the disclosure regulations, with a view to ensuring that the new regulations provide clarity and, where possible, consistency to enable schemes to meet their legal obligations in this area.  A key objective of the consolidation process was to allow pension providers to meet their disclosure responsibilities through electronic communications instead of paper-based communications or a mixture of electronic and paper-based communications, with potential savings to business of £115.1 million being identified.

Thomson v GE Pension Plan / The GE Supplementary Pension Scheme

The Deputy Pensions Ombudsman has dismissed a claim relating to the “reasonable expectations” of members in connection with discretionary increases.  In reaching her decision, the DPO distinguished the case of IBM United Kingdom Holdings Limited v Dalgleish and others.

Please click here for a full summary of the decision.