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:

Queen’s Speech 2014
Institute & Faculty of Actuaries outlines its position on the 2014 Budget reforms
DWP publishes latest issue of “Touchbase”
FCA updates retirement income market study terms of reference
HMRC publishes minutes of the Pensions Industry Stakeholder Forum held on 17 April 2014

Queen’s Speech 2014

The Queen’s Speech on 4 June 2014 announced plans for two new pensions bills.

Pensions Tax Bill 2014

The Pensions Tax Bill is intended to give effect to the pensions tax measures which were announced in the 2014 Budget (Please see our Alert for details.) The Bill would:

introduce a new tax framework that removes restrictions to the way individuals can access their DC pension savings, and allow them to access their savings subject to their marginal tax rate
remove the previous restrictions the Government placed on how people are able to access their money, and give individuals the freedom and choice to access their pensions as they see fit
introduce anti-avoidance provisions to prevent individuals taking advantage of the new flexible arrangements for tax avoidance purposes.

Private Pensions Bill 2014

The Private Pensions Bill is intended to provide wider choice for savers, with Defined Ambition–style options (DA) for pension saving encouraging greater risk sharing between parties and allowing savers to have greater certainty about their retirement savings. The Bill would:

make provision for a new legislative framework in relation to the different categories of pension schemes. It would establish three mutually exclusive definitions for scheme type based on degrees of certainty in the benefits that schemes offer to members
define schemes in terms of the type of “pensions promise” they offer to the individual as they are paying in. A scheme would be categorised as DB, DA (shared risk) or DC, corresponding to the different types of promise, respectively – full promise about retirement income, a promise on part of the pot or income, or no promise at all
enable “collective schemes” that pool risk between members and potentially allow for greater stability around pension outcomes. It would also contain a number of measures relating to the valuation and reporting requirements for collective schemes.

Institute & Faculty of Actuaries outlines its position on the 2014 Budget reforms

In the 2014 Budget the Government announced plans to increase freedom and choice by enabling people to withdraw income or capital from pension pots at the point of retirement or thereafter, as they see fit.

On 6 June 2014, the Institute & Faculty of Actuaries published a position paper which outlines its perspective on the announcement.

DWP publishes latest issue of “Touchbase”

This month’s newsletter, which is aimed at advisers and intermediaries, contains information on the Pensions Act 2014 (for further details on this Act please see our Alert) and the DWP’s pension tracing service which helps individuals locate “lost” pensions.

FCA updates retirement income market study terms of reference

The FCA announced the retirement income market study in February 2014 after its research found that the annuity market was not working well for consumers.

While the overarching objective of the market study remains to assess whether there are obstacles to competition working more effectively for consumers, in light of the Budget announcement the FCA has revised its scope to give it a more forward looking focus. This is intended to allow the FCA to understand developments in the new landscape and identify any competition risks and potential consumer detriment.

The Budget announced plans for a guidance guarantee, on which the Government is currently consulting. The FCA is working with Government and stakeholders to develop the framework for the impartial guidance guarantee which will be offered to individuals at retirement from April 2015.

A supervisory review into sales practices of annuities was originally going to form part of the market study into retirement income. The focus of this work remains unchanged but this will now be conducted as a standalone thematic review, to report by the end of the year. Good and poor practice identified through this review will feed in to the market study and will also form part of the evidence-base for the development of the guidance guarantee. It will also help inform the consultation on the implementation of the guidance guarantee.

Originally the FCA had planned to issue interim findings from the market study in the summer. It now intends to publish this later in the year.

HMRC publishes minutes of the Pensions Industry Stakeholder Forum held on 17 April 2014

On 4 June 2014, HMRC published the minutes of the Pensions Industry Stakeholder Forum held on 17 April 2014. Agenda items included:

the consultation on pensions flexibility
a consultation on whether to change existing rules that deny tax relief for pension contributions made by individuals over age 75
pensions liberation
dependants’ scheme pensions
an update on the AA and FP14.