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:

• TPR publishes communications guide
• TPR launches new Trustee Toolkit Investment module
• Pensions Ombudsman: two pension liberation determinations
• Pensions Ombudsman publishes Capita Oak information
• HMRC Inheritance tax manual update
• PPI publishes Transitions to Retirement report

TPR publishes communications guide

On 23 April, TPR published a finalised version of the essential guide “How to communicate with your scheme members about pensions flexibilities”. The guide, which was in draft form until the regulations on the new information requirements were passed by Parliament, takes schemes through how they should communicate Pension Wise and the new retirement options available to members at different stages of the retirement process. The guide includes examples of generic risk warnings that can be adapted for use in schemes’ retirement documentation.

The guide also links to the new Money Advice Service leaflet which has been approved by TPR. Schemes must either include this guide or a statement containing materially the same information in their retirement communications. In addition, TPR recommends schemes ask members to sign a statement to confirm whether they have received the Pension Wise guidance or financial advice from an FCA regulated adviser, and to confirm that they have read the generic risk warnings, to help members engage with their retirement choices.

TPR launches new Trustee Toolkit Investment module

On 24 April, TPR launched their Trustee toolkit module Investment in a DB scheme – “How well do you know your DB investment strategy?”. The new module is aligned with TPR’s revised code of practice “Funding defined benefits”, and highlights some key tools to help in reviewing a scheme’s investment strategy, including scenario analysis, projection modelling and stochastic modelling, as well as examples of the types of changes trustees typically make to a scheme’s asset allocation.

Pensions Ombudsman: two pension liberation determinations

On 22 April 2015, the PO published decisions in two complaints made against pension providers who had made transfers to the Capita Oak Pension Scheme at the request of a member (Mr Winning). The two cases are PO-5799 and PO-5930.

Mr Winning’s transfers to the Capita Oak Pension Scheme were made in 2012. Mr Winning argued that the transferring providers, Legal & General and Scottish Widows, had not made adequate checks before paying the transfer values to the Capita Oak Pension Scheme.

The PO did not uphold the complaints. Whilst the PO expressed sympathy for the position that Mr Winning was now in, there had been no administrative failure by the providers in complying with his request. The transfers were requested before TPR had issued guidance on the subject; they were to a registered pension scheme and Mr Winning appeared to have a statutory right to transfer.  There was no reason for them to be withheld.

The Capita Oak Pension Scheme was also the subject of a decision published in December 2014 in the case of “Mr X” – see our earlier case report.

Full reports of the latest cases will follow.

Pensions Ombudsman publishes Capita Oak information

The PO also published further information on 22 April 2015 for people who have made transfers to Capita Oak, and who may have concerns about pensions liberation.

HMRC Inheritance tax manual update

On 21 April 2015, HMRC updated guidance in relation to pensions contained in its Inheritance Tax Manual (IHTM). The changes result from the Taxation of Pensions Act 2014 (in force from 6 April 2015), which introduced greater flexibility in relation to pension benefits, both during a member’s lifetime and on death.

New wording inserted in IHTM17052 (Pensions: IHT charges: general power over death benefits), covers the position where a pension scheme offers a number of different payment options following the death of a scheme member. In this scenario, the death benefits will only be treated as part of the member’s estate for IHT purposes if the scheme provider can be bound to pay the benefits in a particular form in accordance with the member’s directions.

PPI publishes Transitions to Retirement report

The Pensions Policy Institute (PPI) has published the latest report in its “Transitions to Retirement” series, which looks at how the UK pensions landscape might support flexible retirements. The report examines evidence from Australia, Ireland, New Zealand and the United States to consider how the UK pension system could evolve in the context of changes to the retirement landscape, including the flexibilities introduced this year.