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 Pensions Act 2014 (Commencement No. 2) Order 2014
- NEST pension saving limits to be scrapped
- First master trust gains independent assurance
The Pensions Act 2014 (Commencement No. 2) Order 2014
On 4 September the Government published the Pensions Act 2014 (Commencement No. 2) Order 2014. This Order brings into force several provisions of the Pensions Act 2014 on 11 September 2014. These include:
- changes to automatic enrolment (such as the removal of the employer’s duty to automatically re-enrol an eligible jobholder if automatic enrolment has been postponed or deferred and the clarification of the transitional period for hybrid schemes)
- a power for the government to make regulations to prohibit certain administration charges from being imposed on scheme members and to impose requirements relating to the administration or governance of a scheme.
For details of the Pensions Act 2014, please see our Alert.
NEST pension saving limits to be scrapped
NEST was set up by the Government to support automatic enrolment by providing a quality low-cost pension scheme, primarily for smaller employers. Restrictions were originally imposed on contributions to ensure that NEST focused on its target market. They were cited by the European Commission as reinforcing how government sought to minimise any competitive advantage that could be gained by NEST through its state aid. (NEST receives a subsidised loan from government.)
But, reflecting changes in the market since then and the disadvantage caused to NEST savers by these constraints, in 2013 the government announced its intention to lift them from 2017. The European Commission has recently confirmed that it will not oppose the move.
As a result, on 8 September 2014 the DWP announced that restrictions which limit annual contributions into NEST will be scrapped.
In addition, pension savers within NEST are set to gain new transfer rights which will give them to same opportunities to consolidate their pension savings as members of other schemes.
The Government intends to undertake a short technical consultation on draft legislation this autumn. While the current plan is for the restrictions to be removed with effect from 1 April 2017, the government will retain the option to remove the individual transfer restrictions earlier, from 1 October 2015, to coincide with the introduction of automatic transfers.
First master trust gains independent assurance
On 11 September 2014, TPR welcomed news that the first occupational DC master trust, the People’s Pension, has obtained independent assurance.
The voluntary assurance framework, published in May 2014, was developed by the ICAEW in association with TPR to support auditors to provide independent assurance reports for the trustees of master trusts. The framework has been designed to evidence the key quality features set out in TPR’s code of practice for DC schemes. For further details, please see our Alert.
Andrew Warwick-Thompson, TPR’s executive director for DC and public service pension schemes, said:
“Properly run occupational DC master trusts are playing a key role in the automatic enrolment project and so it is vital that such schemes are able to demonstrate high standards through the independent assurance framework.
I am pleased that we have already seen the first master trust obtain independent assurance since the framework was published in May and expect other schemes to adopt this important accreditation in the coming months.
Master trust assurance will give employers the confidence to choose a master trust scheme that can evidence the presence of the key quality features which the regulator believes underpin good member outcomes. It will also help to guard against providers without the necessary resource and competence to operate a high quality scheme.”
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