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

• Revised DC Code comes into force
• Department for Education publishes proposed amendments to Teachers’ Pension Scheme
• European Commission launches public consultation on personal pensions
• HMRC launches online FP16/IP16 process
• HMRC publishes Pension Schemes Newsletter 80
• HMRC releases latest pension flexibilities statistics
• PO updates its approach in appeals
• PPF publishes update on third levy triennium work
• PPI issues Briefing Note 84
• TPR publishes annual automatic enrolment analysis
• TPR appoints Front-line Executive Director
• Advocate General’s Opinion in Dr David L Parris v Trinity College Dublin and others [2016]

Revised DC Code comes into force

TPR’s revised code of practice on the governance and administration of occupational trust-based schemes providing money purchase benefits (“the Code”) came into force on 28 July 2016.  To coincide with this, TPR published responses to the consultations on and final versions of its “how to” guides and its compliance and enforcement policy.

For full details, please see our Alert.

Department for Education publishes proposed amendments to Teachers’ Pension Scheme

On 29 July 2016, the Department for Education (“DfE”) published a letter inviting comments on proposed amendments to the Teachers’ Pension Scheme. The draft amending regulations relate to four specific areas: ill-health retirement; serious ill-health commutation; phased retirement in relation to irregular workers; and minor technical amendments.

The DfE explains that the changes are needed to ensure that recent reforms to the TPS introduced in April 2015 work fully as intended, in line with previous consultations on the regulations involved.

Any comments should be made by 16 September 2016.

European Commission launches public consultation on personal pensions

On 27 July 2016, the EU Commission launched a public consultation on a potential EU-wide framework for personal pensions.

The objective of the consultation is to identify potential obstacles to the uptake of personal pension products and to seek views on how to best address them. The consultation is aimed at helping the Commission analyse the case for an EU personal pension framework. Individuals and other stakeholders (companies, representative associations and governments) are asked their opinion on possible EU action designed to provide personal pensions which are simple, affordable, transparent and provide better returns.

The Commission stated that “the EU’s changing demographics mean[s] that the proportion of workers supporting those in retirement will be halved by 2060. As a result, European pension systems will face the dual challenge of remaining financially sustainable and being able to provide an adequate income to pensioners. The consultation will enable the Commission to assess what can be done at EU level to support a wider choice of personal pensions competing across borders”.

The consultation will run until 31 October 2016.

HMRC launches online FP16/IP16 process

On 28 July 2016, HMRC announced the launch of its new online service for members wishing to apply to protect their pension savings from the LTA tax charge, through Fixed Protection 2016 (“FP16”) and Individual Protection 2016 (“IP16”)

The service replaces the interim paper process for those protections, and the online form for applying for Individual Protection 2014 (“IP14”). Members will no longer receive paper certification of their protections, but will be able to view details online, and print as necessary.

Guides to the online service for both schemes and members were launched at the same time, alongside a new guide for members on valuing their pensions for IP14 and IP16.

A helpline is available in the case of any problems encountered when making applications.

HMRC publishes Pension Schemes Newsletter 80

HMRC published Pension Schemes Newsletter 80 on 28 July 2016. Among other things, it includes information on the latest pension flexibility statistics, the launch of the LTA online service (see above), and relief at source (receipt of notices in relation to annual returns of individual information for 2015 to 2016).

The notes in relation to the LTA service cover the withdrawal of the interim application process from 31 July 2016 and the issue of temporary reference numbers.

Although temporary reference numbers will continue to be recognised by HMRC and protect members from adverse tax consequences, HMRC strongly recommends that individuals who have used the interim process follow-up with an online application in order to obtain a permanent protection notification number. Applying for a permanent reference number means that details of an individual’s IP16 or FP16 (and any previous lifetime allowance protections) will show in their personal tax account.

Any applications made after 31 July 2016 using the interim paper process will be returned and HMRC will direct the member to the online service to make their application.

The notes also cover the development of the “pension scheme administrator look up service” under which trustees will be able to check the tax protection status of their members. It is anticipated that this service will be available later in the year.

HMRC releases latest pension flexibilities statistics

On 28 July 2016, HMRC released figures relating to flexible payments made from pensions since April 2015, updated to include the second Quarter of 2016. The figures include the number of flexible payments made from pensions, the number of individuals who have received a flexible payment, and the total value of all flexible payments reported to HMRC.

The figures show that 159,000 people accessed £1.7 billion flexibly from their pension pots since April 2015, taking the total value of payments to over £6 billion (across 772,000 payments) since the launch of the freedoms.

PO updates its approach in appeals

On 27 July 2016, the PO published its updated approach to appeals.

The PO has only rarely been a party to an appeal against one of its own determinations, generally only appearing at those which raise questions affecting the PO’s legal jurisdiction or office procedures.

The PO states that, following the appeal case of Hughes v Royal London earlier in 2016 and its wider implications, it has decided that it would be timely to review the position on when to apply to participate in an appeal, looking to be more pro-active, against the backdrop of seeking to assist the court.

Examples it gives of increased participation may include where the decision could have a wider impact on the pensions industry, such as pension liberation or auto-enrolment, or where there is a significant concern over access to justice and participation is deemed necessary to properly present and argue the points – the Principle of Equality of Arms.

Each case will be individually considered, and the PO states that it is not looking to set any precedent when making a decision about participating.

Claire Ryan, Legal Director at the Pensions Ombudsman Service said, “Widening the circumstances where the Ombudsman may look to intervene in appeals of determinations was carefully considered and is supported by the Department for Work and Pensions. We believe that the pensions industry and parties to complaints will welcome the change.”

PPF publishes update on third levy triennium work

On 27 July 2016, the PPF published an update on its plans for the third levy triennium, which starts in 2018. As announced in its confirmation of the Levy Determination for 2016/17 in December 2015, work has been ongoing to consider what changes to the Experian insolvency model might be appropriate.

David Taylor, General Counsel at the PPF, commented “While the framework adopted for 2015/16 onwards, including the Experian model, is working well, we are grateful to those stakeholders who have already shared their thoughts on the levy rules with us. The PPF-specific model has been broadly popular, as has the web-based portal. The first year’s invoicing using the model has been positive, with a significant drop in appeals. There are clearly areas where we can continue to develop the model to better reflect the risk that some schemes and their employers pose to us. There are also areas like FRS102 where we need to ensure that the levy rules reflect wider changes.”

A formal consultation on proposals for the triennium will follow at the end of the year.

The PPF intends that the draft levy rules and levy estimate for 2017/18 will be published as normal in the autumn. Reflecting the PPF’s commitment to providing stability and predictability in the levy rules, the update reiterates the intention only to make major changes to the rules as part of the three year cycle. Accordingly, changes for 2017/18 are likely to be limited.

PPI issues Briefing Note 84

The PPI released its latest Briefing Note – How do female lifecourses affect retirement? – on 28 July 2016. The primary focus of the note is to consider how women’s retirement income is affected by motherhood, including the impact of taking time out of work to care for children, as well as the implications of future reduced income.

The note was produced in conjunction with The Wellbeing, Health, Retirement and the Lifecourse project (“WHERL”) – a research project investigating ageing, work and health across the lifecourse. The project builds on an existing UK-Canadian collaboration examining lifecourse influences on later life work trajectories across several European countries and the US. The interdisciplinary project team involves universities and partner organisations, including the DWP.

TPR publishes annual automatic enrolment analysis

On 27 July 2016, TPR issued its fourth annual commentary and analysis in relation to automatic enrolment. The figures show that two thirds of all employees are now active members of a pension scheme, compared with just 47% in 2012. Compliance rates amongst the first group of small and micro employers to undergo auto enrolment are given as above 95%.

Charles Counsell, Executive Director for Automatic Enrolment at TPR, said: “Our key challenge in the past year has been to engage hundreds of thousands of small and micro employers and to help them prepare for automatic enrolment. We needed to target these employers in new and innovative ways […] The compliance rates achieved have been consistently at the top of our expectations and the savings landscape has been transformed. But we know the job is not yet done and there are still significant challenges ahead.”

The majority of employers left to stage (57%; around 950,000 employers) will be micro employers, with just over a third of those (34%) employing only one person.

Other key points from the report include:

• 93% of employers use DC schemes for automatic enrolment, with 98% of those choosing a trust-based scheme opting for a master trust
• around half of workers who have been put into a pension have been automatically enrolled into a master trust (3 million)
• 97% of workers put into a master trust are in one with master trust assurance.

TPR appoints Front-line Executive Director

TPR announced the appointment of Nicola Parish as its Executive Director for Front-line Regulation on 28 July 2016.

As Executive Director, Ms Parish will be responsible for the education and enablement activities of TPR’s Customer Support and Regulatory Transactions teams, risk identification and escalation by the Intelligence team, and the enforcement interventions of TPR’s Case Management team. She will also be responsible for the delivery by TPR of the new approach to the regulation of master trusts.

Advocate General’s Opinion in Dr David L Parris v Trinity College Dublin and others [2016]

Advocate General Kokott (“the AG”) has given her opinion to the ECJ in relation to a case regarding the provision of same-sex partners’ benefits on death.

Please see our case report.