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:

The Marriage (Same Sex Couples) Act 2013 (Consequential Provisions) Order 2014
BIS issues consultation on the future of civil partnership in England and Wales
Steve Webb announces delay on charges cap
Accounting Standards – the UK tax implications of New UK GAAP
Equitable Life Payment Scheme passes £800 million in payouts
Automatic enrolment: new forecast

The Marriage (Same Sex Couples) Act 2013 (Consequential Provisions) Order 2014

The majority of the provisions of the Marriage (Same Sex Couples) Act 2013 will come into force on 13 March 2014. The Act will extend marriage to same sex couples under the law of England and Wales.

As a minimum, occupational pension schemes will be required to provide same sex spouses with:

(if applicable) contracted-out survivors’ benefits relating to service on or after 6 April 1988; and
all other survivors’ benefits relating to service on or after 5 December 2005.

These are the same minimum benefits that must be provided to civil partners.

This Order, which also comes into force on 13 March 2014, makes consequential amendments to subordinate legislation in respect of same sex marriage.

Amending a scheme’s trust deed and rules

The Occupational Pension Schemes (Modification of Schemes) Regulations 2006 allows for trustees of occupational pension schemes to vary schemes so as to provide entitlements to be given to new groups without this affecting member’s subsisting rights in certain circumstances. When civil partnerships were introduced, these regulations were amended specifically to provide that payments could be made to civil partners. This Order makes a similar amendment now to cater for married same sex couples.

In addition, amendments are made to other pensions regulations, for example, the contracting-out legislation to ensure that married same sex couples are covered.

Once this Order is in force it will be possible for trustees to amend their rules by resolution to take into account the introduction of same sex marriage. However, in order to make a modification which provides benefits in excess of the statutory minimum (outlined above) the trustees will need to obtain the consent of the scheme’s employer(s).

BIS issues consultation on the future of civil partnership in England and Wales

The Government is carrying out a review of the operation and future of the Civil Partnership Act 2004 in England and Wales. This consultation, which closes on 17 April 2014, seeks views on and evidence about civil partnership and its continuing role when all couples, whether they are of the same sex or opposite sex, are able to marry.

The treatment of married same sex couples in terms of their entitlements to survivor benefits from occupational pension schemes will be the same as for civil partners (see above). This issue is being considered as part of a separate review and is not covered by this consultation.

Steve Webb announces delay on charges cap

On 23 January 2014 Steve Webb issued a written ministerial statement which confirms that, while the government “is committed to tackling high charges in workplace pension schemes”, any cap on charges will not be introduced before April 2015.

As the Government has “consistently encouraged firms to start getting ready for automatic enrolment twelve months ahead of the time the new employer duties apply to them”, it wishes to give employers at least twelve months’ notice of the rules that will apply to them.

Accounting Standards – the UK tax implications of New UK GAAP

Over the next few years UK companies are likely to see changes to the accounting practice used to prepare financial statements. In particular, many UK companies will be required to apply one of EU-Endorsed International Financial Reporting Standards, FRS 101 or FRS 102.

HMRC has published two overview papers. The purpose of these papers is to assist companies who are thinking of choosing or have already chosen to apply either FRS 101 or FRS 102. In particular, it provides an overview of the key accounting changes and the key tax considerations that arise for those companies that transition from current UK GAAP (Generally Accepted Accounting Principles) to the new standards.

‘FRS 101 Overview Paper’ provides an overview of the key accounting changes and the key tax considerations that arise for those companies that transition from current UK GAAP to FRS 101.
‘FRS 102 Overview Paper’ provides an overview of the key accounting changes and the key tax considerations that arise for those companies that transition from current UK GAAP to FRS 102.

The main section of the papers is split into two parts. Part A provides a comparison to the position under current UK GAAP and Part B provides a summary of the accounting and tax considerations that arise on transition.

These papers reflect HMRC’s current thinking based on the law as it stood as the date of publication. It is intended that these papers will be updated as further information is available and as new accounting standards and tax law develop.

Equitable Life Payment Scheme passes £800 million in payouts

The Equitable Life Payment Scheme, set up by the government in 2011 to make payments to Equitable Life policyholders who suffered financial losses has now made payments to 717,600 policyholders totalling £816 million.

Automatic enrolment: new forecast

On 23 January 2014 TPR published an updated forecast of the number of employers due to become subject to automatic enrolment duties over the next four years with the aim of helping the pensions industry prepare to meet their clients’ needs.

The forecast underlines the scale of the challenge ahead, with around 30,000 medium sized employers reaching their ‘staging dates’ between this April and the end of the year.

The numbers show a significant increase to the volumes of employers who have staged previously. At the start of this year, a total of 5,431 employers had completed a declaration of compliance, by registering with TPR that they had met their duties.

In TPR’s opinion, those employers due to stage before June 2014 should by now have in place a suitable pension provider and payroll software.