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:

• Pensions Minister promotes the importance of retirement planning
• Abolition of DB contracting out
• Consultation on changes to the PPF administration levy
• FRC consults on new UK and Irish interim reporting requirements
• HMRC publishes guidance on contracted-out decision making and appeals
• NEST publishes voluntary governance statement

Pensions Minister promotes the importance of retirement planning

As the government gears up to launch its ‘guidance guarantee’ (which aims to help people approaching retirement make sense of the new options for accessing their DC pension benefits from April 2015 (for details see our Alert)), Steve Webb, the Pensions Minister is to launch the radio equivalent of a soapbox tour.

Between now and April 2015, the Pensions Minister intends to hold live, phone-in, surgeries on BBC radio stations during which local radio listeners in every part of Britain will be given the chance to quiz him on the government’s pension reforms.

This new initiative comes alongside other efforts to help the public better understand how pensions work and make it easier for people to save for the future. The DWP is also launching “PensionTube”, a new online hub within the video sharing website YouTube.  PensionTube will bring together content from the government and trusted independent sources that will in time cover the whole spectrum of pension-related issues.

Finally, a major advertising campaign, themed ‘Your Pension, Your Future’, will be launched this week to raise awareness of reforms to the State Pension (see our Alert for details).

Abolition of DB contracting out

The DWP has published short form guidance for employers and trustees on the ending of contracting-out out of the additional State Pension from 6 April 2016.

Consultation on changes to the PPF administration levy

The PPF is intended to protect the members of eligible DB schemes (and the DB element of hybrid schemes) by paying compensation where an employer has a qualifying insolvency event and there are insufficient assets in the scheme to pay benefits at PPF compensation levels.

Some of the administration costs of the PPF are met by the DWP. These costs are recoverable through the administration levy which is payable by those pension schemes which are eligible for PPF protection.

The administration levy is collected annually by TPR.

A review of the administration levy rates has concluded that a levy deficit of £5.1 million will exist at the end of 2014/15. The DWP anticipates that this deficit would increase by approximately £5 million in each subsequent year if remedial action is not taken.  The Government is therefore consulting on changes to the administration levy.  It is considering the following options:

• no change
• increase the levy to immediately make good the deficit
• increase the levy to eliminate the deficit by 31 March 2020
• increase levy rates each year in 2015/16, 2016/17 and 2017/18 to eliminate the deficit by 31 March 2022. This is the Government’s proposed approach. It would limit the immediate impact of the increase in the rates for 2015/16 and provide eligible schemes with time to plan for further increases in 2016/17 and 2017/18.

The consultation closes on 9 January 2015.

FRC consults on new UK and Irish interim reporting requirements

On 12 November 2014 the FRC issued an Exposure Draft FRED 56 ‘Draft FRS 104 Interim Financial Reporting’ which would revise the FRC’s existing guidance on interim financial reports for consistency with new UK and Irish GAAP (FRS 102).

These proposals are relevant for entities that apply UK and Irish GAAP and prepare interim financial reports. They aim to promote the publication of informative and understandable interim financial reports.

Roger Marshall, FRC Board Member and Chairman of the Accounting Council, said: “The publication of reliable interim financial reporting improves the ability of investors, creditors or others to understand an entity’s capacity to generate earnings and cash flows and its financial position and liquidity.

Draft FRS 104 is based on IAS 34 ‘Interim Financial Reporting’. Using an IFRS-based solution is consistent with the approach adopted for developing new UK and Irish GAAP.”

Comments on the proposals are invited by 12 January 2015. The FRC intends to finalise the new interim reporting requirements by the end of the first quarter of 2015.

HMRC publishes guidance on contracted-out decision making and appeals

Formal notifications of decisions relating to contracting-out issues, for example, the issue, cancellation and variation of a contracting-out certificate carry the right of appeal to an independent Appeal Tribunal.

Informal notifications, for example GMP statements, are classed as outcome decisions. Outcome decisions do not attract the right of appeal, however members, trustees and / or employers have the right to query any discrepancies.  Where, after investigations are exhausted, a query cannot be resolved and it is still disputed, a formal decision will be issued which will carry the right of appeal to an Appeals Tribunal.

HMRC has published guidance for pension scheme administrators on the National Insurance Services to Pension Industry (NISPI) decision making and appeals process.

NEST publishes voluntary governance statement

The Pensions Regulator welcomed news that NEST, the government-backed workplace pension scheme, has successfully completed a voluntary governance statement.

The regulator is calling on all schemes, including master trusts, to produce a voluntary governance statement to demonstrate to their sponsoring employers and members they are meeting the regulator’s DC quality features, and has provided an online assessment tool and template to assist trustees in the process.