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 consultation in relation to cessation of DB contracting out
• DWP consultation in relation to banning member-borne commission payments
• DWP and TPR launch workplace pensions campaign
• HMRC publishes Pension Schemes Newsletter 73
• House of Commons Library publishes updated briefing paper on guidance guarantee
• PLSA publishes three “Made Simple” Guides
• PLSA launches automatic enrolment service
• PPI publishes comparison of DC regulatory frameworks
• TPR launches new interactive webpages for small and micro employers
• TPR adds further DC governance standards guidance
• Work and Pensions Select Committee report

DWP consultation in relation to cessation of DB contracting out

On 20 October 2015, the DWP launched a consultation asking for views on further legislative changes in respect of the cessation of DB contracting out from 6 April 2016 (for further detail see our Alert).

The draft Pensions Act 2014 (Abolition of Contracting-out for Salary Related Pension Schemes) (Consequential Amendments) Order 2016 contains, for the most part, minor and technical changes to other secondary legislation to take account of the abolition of contracting out.

The consultation runs until 16 November 2015.

DWP consultation in relation to banning member-borne commission payments

On 26 October 2015, the DWP launched a consultation entitled “Better workplace pensions: banning member-borne commission in occupational pension schemes”.

The consultation seeks views on how best to regulate a ban on member-borne commission payments in occupational pension schemes that provide money purchase benefits and which are being used as qualifying schemes for automatic enrolment.

The consultation follows the Government’s announcement in March 2014 that its intention was to prohibit such payments to advisers from April 2016. The consultation runs until 27 November 2015.

DWP and TPR launch workplace pensions campaign

On 21 October 2015, the DWP and TPR launched a multimedia campaign which aims to change the perception of pensions in the workplace. The adverts will appear online, on radio, and in print for the remainder of this year and into 2016, and target smaller employers and their employees who will be brought within scope of auto-enrolment by February 2018.

The new campaign – which comes with the hashtag #DontIgnoreIt – was launched by Pensions Minister Baroness Altmann, who said that behind the “fun and quirky” campaign “lies a very serious message. We need everyone to know they are entitled to a workplace pension – and we need all employers to understand their legal responsibility to their staff, but also to feel more positive about engaging with workplace pensions.”

HMRC publishes Pension Schemes Newsletter 73

On 23 October 2015, HMRC published Pension Schemes Newsletter 73. Among other things, it includes information on annual allowance tax charges for 2014-15 (following the reduction of the AA to £40,000), taxation of lump sum death benefits (through PAYE) and the reduction of the lifetime allowance to £1 million from 6 April 2016.

HMRC Newsletter 72 had promised “much more detail” on the transitional protections relating to the reduction of the LTA. Newsletter 73 gives some further detail:

• individuals wanting to rely on the new fixed protection 2016 (FP16) or individual protection 2016 (IP16) must apply for them before taking any benefits on or after 6 April 2016 (there will be no application deadlines for these protections)
• individuals can apply for protection through the new online self-service, which will be available for members to use from July 2016
• there will be an interim process: members wanting to take benefits between April and July 2016 must apply to HMRC in writing, and will receive a written response which can be presented to their scheme administrator

The Newsletter also announces a new web page in relation to the Scottish Rate of Income Tax, and that the first quarterly release of official statistics on “Flexible Payments from Pensions” will be published on 28 October 2015.

House of Commons Library publishes updated briefing paper on guidance guarantee

The House of Commons Library published a briefing paper on 16 October 2015 (updating a paper first released in July 2015) and looks at Pension Wise and the guidance guarantee which were introduced when the new pension freedoms came into force on 6 April 2015.

The updated version now covers the extension of Pension Wise to people aged 50 and over, the transfer of responsibility for Pension Wise from HMT to the DWP from April 2016, and the recent HMT/FCA consultations and call for input in relation to public financial guidance.

PLSA publishes three “Made Simple” Guides

The PLSA launched three new “Made Simple Guides” on 21 October 2015, in relation to Diversified Growth Funds, Foreign Exchange and “Better Data, Better Governance”. The aim of the guides is to help demystify some of the most complex and technical areas of investment and pensions management. Graham Vidler, Director of External Affairs at PLSA, said of the “Made Simple” series of guides that “they cut through the pensions jargon to provide straightforward explanations in plain English.”

PLSA launches automatic enrolment service

On 19 October 2015, the PLSA launched “Pension Solution”, an online service designed to guide small employers through Automatic Enrolment for the first time. The service, which costs £49 for a year’s membership, aims to give a step-by-step guide for small businesses on how to set up automatic enrolment, an impartial guide to pension providers in the market, including ratings and reviews of the providers given by other employers, and templates covering employee communications.

PPI publishes comparison of DC regulatory frameworks

On 22 October 2015, the PPI published a report, commissioned by Scottish Widows, comparing the regulatory frameworks for DC pensions. The research draws on discussions conducted with experts on regulation, and desk research, to explore the differences between the two regulatory regimes for DC pensions (TPR and FCA). It considers the pros and cons of the respective regimes for DC pensions, with a focus on the impact of these for savers.

Amongst the conclusions of the report was that “both regulators have strengths that could helpfully inform approaches taken by the other regulator” – and that, while competing views exist around whether there should be a single regulator, the consensus was that combining the regulators would not be straightforward.

TPR launches new interactive webpages for small and micro employers

On 20 October 2015, TPR launched a new interactive web “journey”, aimed at helping reduce the challenge of automatic enrolment for small employers.

The simplified step-by-step guide is designed to meet the specific needs of the 1.8 million small and micro employers who are due to take on auto-enrolment duties over the next three years, and who may not have pensions experience. The guide provides information for employers on what to do and by when, using videos, animations and infographics.

TPR’s Executive Director for automatic enrolment Charles Counsell said “Workplace pensions do not need to be complex for the hundreds of thousands of employers who have still to meet their legal duties. Many micro employers have just one member of staff. We are helping them to navigate a straightforward path to successfully completing automatic enrolment.”

The new online journey includes a ‘duties checker’, with interactive questions which allow an employer to establish if they will need to put any staff into a pension scheme, and guides for those who do not employ staff eligible for automatic enrolment, including how to provide a pension scheme for employees who still ask to join one.

TPR’s supporting publications, letters and the emails have also been redesigned with the aim of meeting the needs of different types of employers.

TPR adds further DC governance standards guidance

As part of their DC governance standards campaign (see our 7 Days of 24 August 2015), TPR launched further materials on 19 October 2015, designed to support DC scheme trustees and their advisers in meeting the new requirements which were introduced on 6 April 2015. The guidance includes a new video aimed at helping trustees to meet the governance standards.

Work and Pensions Select Committee report

On 19 October 2015, the Work and Pensions Committee of the House of Commons published a report setting out the results of its inquiry which reconsidered the issue of guidance and advice in the light of six months’ experience of the new pension freedoms.

The Committee concludes “that consumers have largely taken sensible decisions with their savings […] Nevertheless, as would be expected with any radical policy departure, there have been some areas of concern and consequent adjustments are being considered.”

The report expresses clear concerns, in particular about the prevalence and impact of pension scams, and makes the following recommendations, in the hope of averting “another mis-selling scandal”, that:

• the Government publish, or require its regulators to publish, statistics on Pension Wise and the advice and pensions markets on a quarterly basis
• the Government initiate a rolling research programme to track the longer-term consequences of pension freedom decisions.
• in relation to pension scams, the Government “urgently redouble its publicity efforts around pension scams” and the “FCA tighten its scam awareness and reporting requirements for regulated firms”
• the FCA strengthen its rules and guidance for pension providers regarding Pension Wise signposting and risk warnings; and assure compliance through mystery shopping exercises
• the Government work with the FCA and guidance providers to develop a more holistic Pension Wise service that offers more personalised support
• the Pension Wise website is developed, to provide an indicative income calculator, illustrative examples tailored to individual circumstances and a printable summary function as a matter of urgency
• the Government announce a clear timetable for the introduction of a pensions dashboard
• the Financial Advice Market Review consider the case for offering two or more Pension Wise guidance sessions per customer
• the Government and the FCA, as part of the Financial Advice Market Review, clarify the distinction between guidance and advice; the definitions of safeguarded benefits; and protections in providing advice to insistent clients.

The committee states its role is to keep a watching brief over the development of the freedoms in the long term, and concludes with the following thought: “freedom to choose is not enough; people must have freedom to make informed choices.”