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In order to offset the increased NI contributions employers will face as a result of the end of contracting out for DB pension schemes, the Pensions Bill includes provision for a statutory override to allow employers to change pension scheme rules without trustee consent.

There is a small group of individuals (approximately 60,000) employed in some formerly nationalised industries, where the employers and trustees are limited in their ability to change scheme rules by legislation made during privatisation.  This legislation prevents employers from making changes to the pension benefits offered to those employees (known as “protected persons”) who were previously employed by the State.

On 18 January 2013, the Government issued a consultation on whether employers who sponsor schemes which include protected persons should be able to use the statutory override in respect of such members.

On 12 February 2014, the Government published its response.

The Government has concluded that the issue can and should be resolved through negotiation between employers and their employees.  It considers that it is important to stand by the promises made to former state workers at the time of privatisation.  It therefore proposes that employers should not be allowed to use the statutory override to alter the pension schemes in relation to members with protected person status.

The FCA started its thematic review of annuities in January 2013.  It:

On 14 February 2014, the FCA published its findings.  Overall the results indicate that some parts of the annuities market are not working well for some consumers.

The FCA found that eight out of ten consumers who purchase their annuity from their existing provider could get a better deal on the open market.  Based on this review, the FCA believes that it is appropriate for it to undertake a competition market study into retirement income.  This study will look at products which are purchased from a pension pot that provide an income during retirement, including:

and examine whether there are obstacles to competition working more effectively for consumers in this market.

The FCA intends to publish its interim findings within six months and a full report within twelve.

The FCA also conducted a thematic review of 13 annuity comparison websites to assess whether they were fair, clear and not misleading, in accordance with its rules.  In conducting its reviews it identified a number of common issues.

While it found good practice in the presentation of alternative options to buying an annuity, such as deferring or pension drawdown, and the use of jargon-free language, all of the websites reviewed raised concerns, with key information and risk warnings often missing or insufficiently prominent.

In response the FCA has published draft guidance for consultation which aims to:

• make clear its expectations of firms
• improve the level of compliance across the sector
• level the playing field for firms and
• ultimately lead to better consumer outcomes.

HMRC has published the February 2014 edition of its newsletter.  It includes information on:

• the new head of Pension Schemes Services
• changes to its “contact us” internet page
• FP14 and IP14
• pension liberation and HMRC’s registration and transfers process
• the Scottish rate of income tax
• Qualifying Registered Overseas Pension Scheme (QROPS) scheme manager ID.

From the tax year 2014/15, the LTA will reduce to £1.25 million from its current level of £1.5 million.  Members with either enhanced or primary protection will be unaffected by this change.

To help those most affected by the reduction in the LTA, the Government has introduced two new forms of transitional protection, FP14 and IP14 (see ourAlert for details).  Please note that the window for applying for FP14 closes on 5 April 2014.  For further information and advice on these please speak to your usual Sackers’ contact.

The PO has received a number of complaints about “pension liberation”.  It has therefore published some key information about its approach to such cases.

Pension liberation schemes promise the early release of savings which are locked into pension schemes and are not normally accessible before a member reaches age 55 without tax consequences.  In some instances the arrangement may even be fraudulent, with the member receiving little or no benefits post transfer.

For further information please see our Alerts: Pension liberation: Latest newsand Pension Liberation – what trustees need to know and / or speak to your usual Sackers’ contact.

On 14 February 2014 TPAS launched a new guide to help people think through the issues they need to consider around pensions when going through a divorce, separation or dissolution process.  The guide looks at what people have spoken to TPAS about and highlights what it feels are the main areas that need to be considered and acted upon.

The OFT provisionally concluded that the legal test for making a market investigation reference (MIR) in relation to the workplace pensions market to the Competition Commission was met.  The competition concerns stemmed from weaknesses in the workplace pension market identified by the OFT.  The OFT found that there are weaknesses on the buyer side of the market, quality of scheme governance and ongoing scrutiny of performance, quality of information and the complexity of the product.  However, in light of the fact that there were steps in place to address the competition concerns that it identified, it provisionally concluded that an MIR would not be appropriate in this instance.  It consulted on this provisional decision in autumn 2013.

Having carefully considered the responses to the consultation, the OFT has decided not to make an MIR to the Competition Commission.

The OFT final conclusion is that the remedies it secured as part of the market study, and the additional recommendations it made to Government have the potential to impact the persistence of the features identified and, therefore, render a MIR to the Competition Commission disproportionate.  In summary these were: