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

• Select committee publishes “household finances” report
• FRC publishes report on the audit of DB pension obligations
• PASA publishes DC administration guidance
• PPF publishes revised actuarial factors
• TPR launches consultation on regulation of Master Trusts

Select committee publishes “household finances” report

On 26 July 2018, the House of Commons Treasury Select Committee published a report on “Household finances: income, saving and debt”. The inquiry included analysis of:

• the state of and prospects for long-term and pensions saving, including the impacts of automatic enrolment, the shift from DB to DC, the role of the state pension and triple lock guarantee, and the effectiveness of policies intended to incentivise and support pension saving
• early evidence on the impact of the introduction of the pension freedoms and the provision and take-up of guidance and advice on retirement provision
• the implications of rising self-employment and the “gig economy” for household finances.

Amongst other recommendations, the paper suggests that the Government:

• “may want to return to the question of whether there should be fundamental reform” of pensions tax relief
• should abolish the recently-introduced Lifetime ISA, and
• should work to extend automatic enrolment to the self-employed.

FRC publishes report on the audit of DB pension obligations

On 26 July 2018, the FRC published a report, entitled The audit of defined benefit pension obligations.

The FRC’s investigation of certain aspects of companies’ corporate reports and audits in 2017, announced in December 2016, found that there is “room for improvement in the audit of pension balances and disclosures in company accounts”. The report cites examples of good practice, identifies weaknesses, and recommends areas for improvement.

PASA publishes DC administration guidance

On 27 July 2018, PASA published DC Administration Governance Guidance for administrators, employers and trustees. The guidance aims to support the management of responsibilities in five core areas – data, decumulation, controls and processes, management information and transitions. As with PASA’s recent Administration Governance Checklist for trustees, the latest guidance has been developed in response to TPR’s drive to improve the governance of pension schemes, under its 21st Century Trusteeship initiative.

PPF publishes revised actuarial factors

On 26 July, the PPF published revised tables containing the actuarial factors for commutation of periodic compensation, early retirement periodic compensation, late retirement periodic compensation, late retirement lump sum, and lump sum conversion.

The new factors take effect from 1 November 2018.

TPR launches consultation on regulation of master trusts

TPR published a draft master trust supervision and enforcement policy for consultation on 26 July 2018.

The policy outlines how TPR will supervise all master trust schemes from the launch of authorisation in October 2018, as well as “more intensively scrutinise higher risk master trusts”. Schemes which achieve authorisation will then be supervised by TPR on an ongoing basis, to ensure that they continue to meet the authorisation criteria, as well as other relevant legislation and codes of practice. The document also details how TPR may use its powers to enforce against master trusts if problems arise or legislation is breached, and ultimately withdraw authorisation if a master trust no longer meets the authorisation criteria or other obligations.

Kim Brown, Head of Master Trust Authorisation and Supervision at TPR, said “Our policy outlines how we will be collaborative in supervising schemes, but tough to use our powers, including de-authorising schemes, if they drop below the standards outlined in legislation.”

The consultation runs until 23 August 2018.