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

• Savings (Government Contributions) Act 2017 passed
• Guaranteed Minimum Pensions Increase Order 2017 published
• Social Security Benefits Up-rating Order 2017 published
• HMRC updates drawdown pension tables
• OBR publishes Fiscal Sustainability Report
• PLSA publishes updated Corporate Governance Policy and Voting Guidelines
• PPI publishes Briefing Note 87
• TPR blogs on use of enforcement powers

Savings (Government Contributions) Act 2017 passed

On 16 January 2017, the Savings (Government Contributions) Bill 2016 received Royal Assent, and became the Savings (Government Contributions) Act 2017.

The Lifetime ISA (“LISA”) will be available from 6 April 2017, with the “Help-to-Save” scheme available from 2018.

The Act makes provision for government bonuses on the savings. Further details, including entry criteria, and the conditions, processes and evidence required for withdrawing funds without triggering a charge, will be set out in regulations in due course.

Guaranteed Minimum Pensions Increase Order 2017 published

The draft Guaranteed Minimum Pensions Increase Order 2017 has been published, and will come into force on 6 April 2017.

The Order specifies the amount by which the GMP element of an individual’s occupational pension entitlement must be increased – 1.0% for the tax year 2017/18.

Social Security Benefits Up-rating Order 2017 published

The Social Security Benefits Up-rating Order 2017 has been published, and will come into force on 6 April 2017.

The Order is made as a consequence of a review under various sections of the Social Security Administration Act 1992 and includes details of the sums mentioned in those sections. It relates to the up-rating of certain social security benefits, pensions and allowances. Amongst other things, it confirms the increase in the full state pension from £155.65 to £159.55 – a rise of 2.5%, in line with the “triple lock” (the Government’s current commitment to raise the state pension in line with the higher of prices, earnings or 2.5%).

GAD’s Report to Parliament on the 2017 re-rating and up-rating orders was published to Parliament on 16 January 2017.

HMRC updates drawdown pension tables

On 18 January 2017, HMRC published updated drawdown pension tables and guidance for calculating the maximum income from capped drawdown pension funds, and, before 6 April 2011, unsecured pension funds and alternatively secured pension funds.

Different tables, and relevant PTM/ RPSM guidance, apply depending on when the reference period or pension year started, and on the age of the member or dependant concerned.

OBR publishes Fiscal Sustainability Report

On 17 January 2017, the Office for Budget Responsibility (“OBR”) published its latest Fiscal Sustainability Report. The report predicts that, in the long term (to 2066-67):

• the cost of state pensions and pensioner benefits will rise, from 5.8% to 8% of GDP, with upward pressure from ageing and the triple lock offsetting savings from prospective rises in SPA
• the cost of public service pensions may drop from 2.1% to 1.3% of GDP, largely reflecting reforms since 2010 and cuts in the public sector workforce.

The report also predicts that, by the end of the next Parliament (2025-26), state pension spending will have risen by 0.3% of GDP, with the number of people receiving the state pension set to rise by 9.1%, after falling by 2.6% during the current Parliament.

PLSA publishes updated Corporate Governance Policy and Voting Guidelines

On 17 January 2017, the PLSA published an updated edition of its Corporate Governance Policy and Voting Guidelines, calling on investors to take a tougher stance on those who set executive pay policy.

The guidelines aim to promote the long-term success of the companies in which the PLSA’s members invest, and ensure that the board and management of these companies are held accountable to shareholders such as pension funds.

The guidelines also call for companies to explain what steps they are taking to bring diversity to their boardroom, and suggest that annual reports should include better information about a company’s corporate culture and employment practices.

PPI publishes Briefing Note 87

On 17 January 2017, the PPI issued Briefing Note 87, the first in a series of publications from PPI-supported PhD students. The first thesis to be published looks at the impact of automatic enrolment in the UK on individual decision making, based on qualitative research methodology.

TPR blogs on use of enforcement powers

On 20 January 2017, Executive Director of Frontline Regulation, Nicola Parish, published TPR’s latest blog.

Highlighting recent enforcement action taken, the blog summarises TPR’s powers, and reminds that “those running pension schemes should be aware that [TPR] will use [its] powers where needed, to ensure better outcomes for savers and sponsors now, and in the years to come”.