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:

• Government moving forward with pension fund consolidation in the public sector
• DWP publishes pensions communication tracking research data
• HMRC revises processes to combat pensions liberation
• HMRC updates the Registered Pension Schemes Manual
• NAPF’s latest Workplace Pensions Survey reveals surge in pensions confidence
• NAPF launches Stewardship Disclosure Framework
• PensionsEurope Statistical survey for the year 2011
• TPR & ICAEW publish ‘Master trust’ draft assurance framework
  
• TPR publishes automatic enrolment registration report
• TPR responds to pension liberation ruling

Government moving forward with pension fund consolidation in the public sector

On 18 October 2013, Local Government Minister, Brandon Lewis, announced that professional advice from financial markets experts will be used to identify vital administrative savings in the management of town hall pensions.

Figures published for the local government pension scheme show there is scope for reforms to improve performance and reduce investment management and administration overheads, which cost taxpayers £508 million in England and Wales. These range from £28 to over £300 per scheme member across 89 separately managed funds.

The government now intends to commission an external organisation, such as a bank, actuarial firm or think tank, to develop specific advice on the potential for new savings and greater public accountability through increased pension fund collaboration.

The commissioned work will focus on 3 possible options:

• a single national investment fund vehicle;

• a small number of closely aligned combined investment vehicles; or

merging the 89 funds into a few larger funds.

It will also consider whether other funded public service pension schemes can benefit from a more collaborative approach.

DWP publishes pensions communication tracking research data

The DWP has published the findings of its latest research into attitudes and behaviours in relation to:

• pensions and later life in general; and

• automatic enrolment to workplace pensions

It also evaluates the effectiveness of advertising that ran from mid May 2013 to mid-July 2013, including the ‘I’m in’ campaign for auto-enrolment.

HMRC revises processes to combat pensions liberation

HMRC has made changes to strengthen existing processes to deter pension liberation and safeguard pension savings. These include:

• Registering a pension scheme – scheme registration will no longer be confirmed on successful submission of the online form. This will enable HMRC to conduct detailed risk assessment activity before making a decision on whether or not to register a scheme;

• Transferring pension funds between registered pension schemes – HMRC will respond to requests for confirmation of a scheme’s registration status without seeking consent from the receiving scheme. However, HMRC will only provide confirmation where the receiving scheme is registered and the information held by HMRC does not indicate a significant risk that the scheme was set up, or is being used, to facilitate pension liberation. Otherwise, a response will be issued setting out the conditions in which HMRC will confirm registration status and explain that one or both of the conditions are not satisfied.

These changes take effect from today (21 October 2013).

HMRC updates the Registered Pension Schemes Manual

On 21 October 2013 HMRC published a list of updates to the Registered Pension Schemes Manual.

NAPF’s latest Workplace Pensions Survey reveals surge in pensions confidence

Confidence in pensions has risen significantly in the past 12 months, particularly among employees already saving in a pension scheme or who have already been automatically enrolled into a workplace scheme, according to theOctober 2013 Workplace Pensions Survey by the NAPF.

The NAPF’s ‘Confidence Index’, which measures the difference between the number of respondents who are confident and not confident in pensions compared to other forms of retirement saving, increased to -2 in this survey from -17 last October – the highest score since 2010 – with 44 per cent of employees now very or quite confident. During this period, 1.6 million people have been automatically enrolled into a workplace pension scheme.

Confidence is higher (59 per cent) among those who were already in a pension scheme and those who have been automatically enrolled than among those who do not save in to a scheme (28 per cent). This represents a rise since October 2012, when 50 per cent of those already saving in a pension were confident in pensions compared to other ways of saving. At 53 per cent, men are more likely to be confident than women (35 per cent).

Similarly, more people (67 per cent) who were in a pension scheme or who have been automatically enrolled are more confident about managing their pension, compared with 49 per cent of those who do not save into a pension.

NAPF launches Stewardship Disclosure Framework

The NAPF has published a Stewardship Disclosure Framework.

This new Framework aims to provide pension funds with greater transparency around the stewardship policies and activities of the 206 asset managers who are signatories to the UK Stewardship Code.

The NAPF is inviting all the asset manager signatories to the Stewardship Code to complete and return the Framework, which is based around the seven principles of the Stewardship Code.

The completed Frameworks will provide for the first time an ‘at a glance’ comparison between the approaches of different asset managers. They will be made publicly available in a dedicated section of the NAPF website – ‘Stewardship Central’.

PensionsEurope Statistical survey for the year 2011

On 18 October 2013, PensionsEurope published its statistical survey for the year 2011. It is based on PensionsEurope members’ figures and covers both voluntary and mandatory schemes. Both the data and an explanatory note are available on PensionEurope’s website.

TPR & ICAEW publish ‘Master trust’ draft assurance framework

The Institute of Chartered Accountants for England and Wales (ICAEW), in partnership with TPR, has produced and published for consultation, a new ‘Master trust’ draft assurance framework. The framework is designed to help trustees of DC ‘master trusts’ demonstrate to potential and existing customers that their scheme is being run to a high standard.

Assurance over the presence of quality features is intended to provide employers who are shopping around for an automatic enrolment scheme, with assurance and confidence in the master trust sector and help them select an appropriate master trust scheme for their workers.

The consultation outlines a set of ‘control objectives’, based on many of TPR’s DC principles and quality features. TPR explains that the objectives, which cover the standards of practice that trustees are expected to meet to deliver good member outcomes, should be underpinned by robust control procedures to help ensure that these objectives are met.

It is expected that master trusts should obtain independent assurance annually.

The consultation closes on 16 December 2013, with final guidance planned for publication in the spring of 2014. For further details please see our Alert.

TPR publishes automatic enrolment registration report

The figures in TPR’s recently published automatic enrolment monthly registration report show that more than 1.7 million workers have already been automatically enrolled by their employers. More than 2,000 large employers have complied with their automatic enrolment duties and TPR is stressing that, by now, medium sized employers should also have plans in place to do the same.

More than 5,000 employers will be subject to their statutory duties concerning automatic enrolment in April next year. They represent the first wave of medium sized employers due to implement automatic enrolment. Hot on their heels will be more than 20,000 employers – with fewer than 250 workers – who will reach their staging date (the date that an employer’s statutory duty first applies) between May and July 2014.

TPR responds to pension liberation ruling

In May 2013, City of London Police carried out a series of raids on organisations accused of involvement in pension liberation schemes. Independent trustees were appointed to administer schemes suspected of involvement in pension liberation fraud. The High Court was asked to determine the legal status of these schemes in light of ambiguities in the scheme documentation.

On 21 October 2013, Mr Justice Morgan ruled that the schemes are occupational pension schemes.

TPR’s executive director for DC, governance and administration Andrew Warwick-Thompson commented:

“We welcome the legal clarity provided by this ruling, which will help inform our wider strategy and enable us to take the appropriate steps to combat activities that could undermine confidence in the pension system.

The judge in this case has ruled that, on a literal interpretation of the scheme documents, these schemes were established as occupational pension schemes. This means that a number of powers are available to us in respect of such schemes, and the market should not doubt that we will continue to take action against schemes where there is evidence of misuse of members’ pots.

We have a suite of powers we can use to disrupt pension liberation fraud including suspending and prohibiting trustees, appointing independent trustees to schemes to protect assets, freezing bank accounts and repatriating monies. The actions that we took in relation to these schemes still stand and the independent trustees put in place by us remain appointed.

We advise the pensions industry to remain vigilant, to have regard to the ‘scorpion’ materials, and to carry out the necessary due diligence. This judgment does not, and should not, interfere with that position.”