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:

• Autumn Statement 2014
• Government confirms increase to State Pension 
• NAPF publishes updated Corporate Governance Policy and Voting Guidelines
• NAPF publishes 40th Annual Survey 
• NAPF publishes new “Made Simple guide”
• Singer & Friedlander Limited Pension and Assurance Scheme Trustees v Corbett

Autumn Statement 2014

The Chancellor of the Exchequer, George Osborne, gave his annual Autumn Statement to Parliament on 3 December 2014. This time there was no major news for pensions. Key points included:

• confirmation of the Government’s plans to introduce significant flexibility for pension savers from April 2015
• confirmation of the abolition of pensions tax charges on death and the announcement that joint life or guaranteed term annuities are also set to be passed on tax-free where an individual dies under age 75
• an announcement that, following informal consultation, the Government has decided that the age limit until which tax relief can be claimed on pension contributions will remain age 75.

For further information, please see our Alert.

Government confirms increase to State Pension

The Government has confirmed that the basic State Pension will rise by around double the rate of inflation. Under the Coalition’s “Triple Lock” policy (which commits the government to an annual rise to the basic State Pension of whichever is highest out of the rise in inflation, the rise in average earnings or 2.5%), all pensioners will see a 2.5% increase from April 2015. This will take the weekly payment up to £115.95, an increase of £2.85 per week.

This increase will also apply to the standard minimum guarantee in Pension Credit, taking it up to £151.20 for single people from April 2015.

In line with the rise in the basic State Pension under the current system, the government has likewise increased the illustrative starting rate of the new single tier State Pension which will be introduced from April 2016 (please see our Alert for details). For those who qualify for the full pension, the illustrative starting figure will be increased by £2.85 to £151.25, in line with the government’s policy that it will be set above the standard minimum guarantee. The actual starting rate will be finalised in autumn 2015.

NAPF publishes updated Corporate Governance Policy and Voting Guidelines

The NAPF has updated its Corporate Governance Policy and Voting Guidelines, which are designed to reflect and push forward current market best practice. The policy and guidelines are developed through consultation with NAPF members and aim to assist members in:

• promoting the success of the companies in which they invest
• ensuring that the board and management of these companies are held accountable to shareholders.

The policy has been revised to take into account the NAPF’s wider view of corporate governance, which looks beyond the essentials of the Corporate Governance Code to consider sustainability more broadly. The NAPF hopes that this policy will encourage both companies and shareholders to move beyond a “box-ticking” approach and to approach their responsibilities in a more considered fashion. Specific changes within the code include:

• A focus on individuals and succession – the updated policy places much greater emphasis on the importance of individual responsibility and, in turn, the role of shareholders in ultimately holding accountable those individuals they have elected to the board.
• A wider view of risk – the NAPF has highlighted the need for reputational risks, such as a company’s approach to tax management and emerging risks, such as those from cyber security and climate change, to be appropriately considered.
• Remuneration – the revised policy sets out more explicitly those issues the NAPF thinks investors should consider carefully when they vote on the remuneration policy, the remuneration report, and the chair of the remuneration committee.
• Voting guidelines – this year the focus has moved from the Corporate Governance Code generally to the specific resolutions being voted on at an AGM. The NAPF hopes this will encourage shareholders to give more consideration to how they use their voting rights and subsequently to exercise their voting rights more coherently on all resolutions.

In addition, the NAPF no longer advocates the use of abstentions as a general approach and places stronger emphasis on holding the individuals within the board to account on issues relevant to their area of responsibility.

NAPF publishes 40th Annual Survey

On 3 December 2014, the NAPF launched its 40th Annual Survey. It is intended to provide a unique snapshot of UK workplace pension schemes today and an opportunity to reflect on how the pensions landscape has changed since 1975.

NAPF publishes new “Made Simple guide”

On 3 December 2014, the NAPF launched a new Made Simple guide which aims to offer an accessible and practical introduction to the world of global withholding tax and tax relief on cross-border securities investments. The guide has been produced in collaboration with Goal Group.

Withholding tax is a levy deducted from income on cross-border securities in the country of origin, but a portion of that tax may be reclaimed by custodians on behalf of their clients. This Made Simple guide outlines the general principles, guidelines for full or partial tax relief, and the practicalities of securing the tax relief that pension schemes are entitled to.

Singer & Friedlander Limited Pension and Assurance Scheme Trustees v Corbett

An employer debt under section 75 of the Pensions Act 1995 can be assigned in the same way as other debts. This was the conclusion of the High Court following an application for a declaration as to whether a scheme’s section 75 debt could be sold with a view to maximising the benefit to the scheme.

Please click here for a full summary of the case.