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

• DWP reveals 50-plus employment rate at record high
• DWP and Pensions Minister warn carers may be missing out on NI credits
• HMRC publishes Pension schemes newsletter 71
• NEST explains why auto-enrolment is achievable for all employers
• TPR responds to consultation on automatic enrolment tool
• TPR publishes new guidance on assessing and monitoring the employer covenant
• Mr Julian Baust v Trustees of the Kodak Pension Plan (PO-7738) – 22 July 2015

DWP reveals 50-plus employment rate at record high

New figures released by the DWP show that the number of people in paid employment who are aged between 50 and 64 rose by 50,000 during the last quarter. This represents a record high, with more than 8.2 million people in this age group now in work.

By 2022, it is estimated that there will be 3.7 million more people aged between 50 and SPA, and 700,000 fewer people aged 16 to 49. The government is therefore committed to changing perceptions of older workers amongst employers and to promoting the business benefits of maintaining an age diverse workforce.

Action taken by the government in recent years, with a view to increasing the number of older people who have a chance to stay in the workforce, includes the abolition of the default retirement age and extending the right to request flexible working.

DWP and Pensions Minister warn carers may be missing out on NI credits

In a press release of 10 August 2015, Minister for Pensions, Baroness Altmann, called on carers to check whether they are entitled to receive the “Carer’s Credit”.

Many people with caring responsibilities are entitled to claim the credit, which can mean a boost of over £200 extra per year in State Pension when they retire. It is designed for those who spend 20 hours a week or more caring for others and who do not qualify for the Carer’s Allowance. However, only an estimated 5% of those eligible are signed up to receive the credits, which fill gaps in carers’ NI records and are converted into additional NI contributions.

HMRC publishes Pension schemes newsletter 71

On 13 August 2015, HMRC published Pension schemes newsletter 71. Among other things, it includes:

• an update on changes to HMRC’s ROPS notification list. Back in April 2015, HMRC changed the way in which it describes its list of ROPS (see our Alert for details). The newsletter provides more information about the change
• a reminder that individuals who exceed the AA must declare this on their Self-Assessment tax return and pay a tax charge. Scheme administrators (generally the trustees) are required to send a pension savings statement to anyone whose pension savings exceed the AA in a particular scheme by 6 October following the end of the relevant tax year. Following the further reduction of the AA to £40,000 from 6 April 2014, more people are expected to be affected this year – the deadline for submitting tax returns for the 2014/15 tax year is 31 January 2016. HMRC has a number of online tools and calculators to help members check whether they need to declare and pay an AA charge
• a note that HMRC is currently considering how its rules can be adapted ahead of the introduction of the tapered AA from 6 April 2016 (see our Alert for an explanation as to how the taper is intended to work). HMRC considers that the existing requirement to issue a pension savings statement to anyone whose pension savings exceed the AA in a particular scheme, may no longer be appropriate in the light of the tapered AA. HMRC welcomes views which can be sent to: policy@hmrc.gsi.gov.uk
• a reminder that, from 6 April 2016, as part for the changes for the tapered AA, all pension input periods (PIPs) should be aligned with the tax year, regardless of whether or not members are likely to be affected by the taper. A PIP is the period over which the amount of pension saving, or pension input, is measured under an arrangement for the purposes of testing against the AA in any given tax year
• a note that “pension scammers are continually looking for new ways to target individuals and their pension savings”. HMRC therefore reminds schemes to signpost TPR’s guidance on pension scams wherever possible.

NEST explains why auto-enrolment is achievable for all employers

As the automatic enrolment duty draws near for small and micro employers, NEST has published five reasons explaining why automatic enrolment may be easier for employers than they might think.

• Most employers are aware of auto-enrolment. According to NEST, only around 10% of employers are not yet aware of the auto-enrolment duties.
• Staging dates are easy to find out, using the employer’s PAYE reference number and TPR’s staging date calculator.
• While around 9 in 10 small and micro employers have yet to select the pension provider they will use for auto-enrolment, NEST (which was set up by the government for auto-enrolment) is available for use by employers. In addition, as we reported in 7 Days on 20 July 2015, TPR now maintains a list of alternative “master trust” pension schemes which are open to employers of all sizes, and which have been reviewed by an independent reporting accountant to prove they are administered to a high standard.
• Experience since the launch of auto-enrolment in October 2012 means greater understanding of the issues faced by employers and pension scheme members.
• Advances in auto-enrolment technology mean that the process is getting easier.

TPR responds to consultation on automatic enrolment tool

On 12 August 2015, TPR issued feedback following consultation on a proposal to develop a basic automatic enrolment tool. The tool is designed to support users of HMRC’s Basic PAYE Tools (“BPT”), which include an estimated 200,000 small and micro employers.

While the use of software is not a requirement for automatic enrolment, TPR believes that using appropriate software either through payroll or pension provider systems helps employers to comply with their duties. TPR notes that most of the respondents to its consultation supported this proposal.

TPR Executive Director for automatic enrolment, Charles Counsell, called the potential development of the tool “another example of how [TPR] seeks to develop new ways to ensure we are meeting the needs of the diverse group of employers due to stage in the coming years.” However, TPR stated that it does not want the tool to have a negative impact on the existing payroll and pension market, and will therefore “keep its need under review”.

The basic tool is due to be available to download from TPR’s website by the end of 2015.

TPR publishes new guidance on assessing and monitoring the employer covenant

On 13 August 2015, TPR published new guidance on assessing and monitoring the employer covenant of a DB pension scheme.

Replacing TPR’s original 2010 guide to “monitoring employer support”, the new guidance is designed to provide practical assistance on evaluating the “extent of an employer’s legal obligation and financial ability to support its DB scheme now and in the future” (known as the “employer covenant”).

Although primarily aimed at trustees and their advisers, the guidance will also be of interest to employer sponsors of DB schemes.

Please see our Alert for details of the new guidance.

Mr Julian Baust v Trustees of the Kodak Pension Plan (PO-7738) – 22 July 2015

The PO partially upheld a member’s complaint that inaction by a scheme’s trustees had delayed a transfer by just under two months and caused loss.

Click here for a summary of the decision.