MPs to investigate impact of recent pension developments on auto-enrolment
The Work and Pensions Select Committee has launched a new inquiry into the roll-out of auto-enrolment.
The inquiry will focus on progress towards implementing auto-enrolment and the improvements in governance and best practice in workplace pensions recommended in the Committee’s 2013 report (see Pensions Bulletin 2013/19). It will also take into account the impact of the changes to retirement planning being prompted by the Budget 2014 changes to pension taxation – as well as the introduction of defined ambition and collective DC schemes through the Pension Schemes Bill, and the trend towards retiring later (or indeed not at all).
Government moves technical amendments to the Pension Schemes Bill
A number of amendments have been moved by the Government to the Pension Schemes Bill ahead of its Public Bill Committee stage which has yet to be scheduled but is expected to take place in mid-October, shortly after the politicians return from the party conference season on 13 October.
The most significant appears to be a new clause inserting a power to make regulations which may impose on managers of non-trust-based schemes a duty to act in members’ best interests when taking certain specified decisions. This duty may apply to shared-risk schemes and schemes providing collective benefits. A breach of this new duty may result in the same consequences for the manager as would apply to the breach of a fiduciary duty owed by the manager to the members.
Other amendments relate to revaluation rules for pension credits following divorce, transfer values where benefits are derived from pension sharing on divorce and extending certain same sex marriage provisions to Scotland. One amendment also allows occupational pension schemes to increase beyond 65 the age at which a pension shared on divorce can first be put into payment, where the scheme has a normal pension age above 65 in relation to that benefit.
Pensions Act 2014 provisions start to come into force
As we move into autumn, more aspects of the Pensions Act 2014 are being brought into force. They are listed in The Pensions Act 2014 (Commencement No. 2) Order 2014 (SI 2014/2377) and the most significant are as follows:
- Turning off the automatic re-enrolment requirement where the automatic re-enrolment date falls within either the three month waiting period or the deferral period for defined benefits and hybrid schemes ending on 30 September 2017
- Adjusting the conditions applying to the above deferral period, so that, in relation to hybrid schemes, it applies only to a “defined benefits member” of such schemes
- Enabling trustees to claim unpaid scheme contributions from the Secretary of State in certain circumstances following employer insolvency
- The suspension and prohibition of corporate trustees where a related individual has been prohibited from being a trustee by the Pensions Regulator; and
- Extending the maximum period between scheme returns from three to five years for micro schemes
All of these provisions came into force on 11 September 2014.
The Order also enables regulations to be made in a number of important areas, such as charge capping and the auto-enrolment alternative quality requirements for defined benefit schemes. We can now expect a number of regulations to emerge over the coming months.
For a briefing of the contents of the Pensions Act 2014 see the LCP guide published in May, shortly after Royal Assent.
First DC master trust gains independent assurance
The People's Pension has become the first occupational defined contribution (DC) master trust to obtain independent assurance under the voluntary assurance framework.
The framework, published in May by the Institute of Chartered Accountants of England and Wales (see Pensions Bulletin 2014/19), has been designed to evidence the key quality features set out in the Pensions Regulator’s code of practice for DC schemes It was developed in association with the Regulator to provide comfort to employers auto-enrolling their members into such arrangements and to help master trusts meet the Regulator’s expectations.
Latest pension taxation news from HMRC
HM Revenue & Customs (HMRC) has published Pension Schemes Newsletter 65, which reports that:
- All current HMRC pension schemes website content will only be available via the HMRC area of the GOV.UK website from the end of September 2014 – and this process appears to have started with newly posted collections of forms and associated guidance, information requirements guidance and relief at source annual information return guidance on the GOV.UK website
- Pension providers will soon be issuing annual allowance pension statements for the 2013/14 tax year to certain registered pension scheme members
This Pensions Bulletin does not constitute advice, nor should it be taken as an authoritative statement of the law. For further help, please contact David Everett at our London office or the partner who normally advises you.
