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

• Financial Assistance Scheme increased cap for long service – draft legislation
• FCA publishes consultation on FSCS levy time period
• FSCS raises supplementary levy for 2017/18
• MiFID II implementation
• WPC extends inquiry into CDC schemes

Financial Assistance Scheme increased cap for long service – draft legislation

The DWP has published the draft Financial Assistance Scheme (Increased Cap for Long Service) Regulations 2018. This follows the release of the Government’s response on “Applying the Financial Assistance Scheme increased cap for long service”, following its September 2017 consultation.

The draft regulations amend the Financial Assistance Scheme Regulations 2005, to provide for a revised FAS cap which depends on a person’s length of pensionable service when they first become entitled to an annual payment or to an ill-health payment under the scheme.

FCA publishes consultation on FSCS levy time period

On 4 January 2018, the FCA published a consultation on the alignment of the FSCS levy time period.

Following consultation in 2017, the FCA made changes to the FSCS funding arrangements, which included aligning the FSCS compensation levy year with the financial year for the FSCS, bringing it forward to 1 April 2018 (from 1 July).

However, the FCA has since become aware of an unintended implication of this change (a different allocation of costs to the life and pensions intermediation class). The FCA therefore now proposes transitional provisions which delay the effect of this change, meaning in effect that the status quo is maintained. Under the proposed transitional provisions, the FSCS would run a nine-month compensation levy year for the period 1 July 2018 to 31 March 2019 with pro-rated class thresholds, with full alignment of the levy time period to apply from 1 April 2019.

The transitional provisions aim to ensure that “the life and pensions intermediation class will continue to benefit from support from the retail pool over the next few months, consistent with the FSCS’s public messaging on this”.

The consultation closes on 5 February 2018.

FSCS raises supplementary levy for 2017/18

The FSCS has announced that it will look to raise a supplementary levy of £23.9m, for the compensation levy year to 30 June 2018, in addition to the original £100m already levied, due to “the continuing growth in the volume of SIPP-related claims”. As in 2016/17, the supplementary levy will be raised against the retail pool of financial services firms in the life and pension advice class.

While the average cost of each SIPP-related claim has fallen from £30,000 to £23,000 over the last twelve months, the overall number of claims has risen by 4%, and the number of claims upheld has risen by 5%.

MiFID II implementation

MiFID II came into force on 3 January 2018, with various implications for pension schemes as investors.

For further information on MiFID II, please see Sackers’ recent “Key Steps for pension schemes”, and the to-do list set out in the latest Finance & Investment Briefing.

WPC extends inquiry into CDC schemes

The Work and Pensions Committee has extended its inquiry into Collective Defined Contribution (“CDC”) pension schemes, also known as “defined ambition” pension schemes.

The original deadline for submissions was Monday 8 January 2018, but this has been extended to 31 January 2018.