Regulator wake-up call to small businesses on auto-enrolment
The Pensions Regulator has called on hundreds of thousands of small businesses to check when they must meet their auto-enrolment requirements after a survey showed many of them do not know the date they need to comply by.
Around 20% of small businesses and almost half the micro employers (those with less than five employees) surveyed did not know their exact staging date. There was better news regarding preparation – nine out of ten employers staging between October 2014 and April 2015 had commenced preparations, whilst 52% of employers staging in 2016 had also started.
General awareness of the requirements has improved since previous surveys (see Pensions Bulletin 2014/11) and the overall positivity surrounding auto-enrolment has remained, with around eight out of ten smaller employers believing auto-enrolment was a “good idea” for their workers.
The Regulator also announced results of a survey of pension scheme intermediaries. Whilst around six out of ten Independent Financial Advisers, payroll administrators and HR professionals are already helping their clients with auto-enrolment, less than half of accountants have any intention of doing so.
There is a warning of the likely last-ditch panic that will engulf the smallest employers, with around nine out of ten bookkeepers and accountants to micro-employers believing their clients will wait until the last minute to seek advice.
Scotland – “No”, but maybe not “no change”
The vote against Scottish Independence last week prevented what would have been a huge change to occupational pensions over the coming years. However, the three main political parties all committed to giving greater powers to the Scottish parliament – powers that could encompass areas such as taxation and welfare, with potential implications for occupational and state pensions.
The powers the Scottish Parliament could be given include:
- Increased powers to set Scottish-specific tax rates and thresholds (limited powers already exist to vary the Scottish tax rates but these have not yet been used). Different tax rates could complicate pension scheme administration. In addition, as the thresholds used for auto-enrolment relate to tax thresholds, there could be different auto-enrolment conditions for Scottish taxpayers
- Powers to vary certain welfare benefits. Quite how far this will go is unknown, but if it is extensive there could, for example, be separate definitions of State Pension Age (SPA) and Basic State Pension (BSP) for Scottish members, which in turn might have implications for occupational pension scheme design for Scottish members.
Comment
Schemes do not need to worry about these possible changes now, but it is worth being aware of the potential implications. The first likely change is the Scottish Parliament deciding at some future point to set Scottish-specific tax rates and thresholds.
New Fair Deal allows former NHS workers to be transferred back into NHS pension scheme
The Department of Health has issued a Policy Note outlining the conditions under which former NHS workers who have been TUPE transferred to a public sector contractor could be allowed to transfer back into the NHS pension scheme before the outsourcing contract term has expired.
There had been uncertainty as to whether former NHS staff who were transferred under the old Fair Deal requirements could transfer back before the existing contract was being retendered. The policy note confirms that under the New Fair Deal such transfers can be made in respect of staff who have continued to be employed by the provider subject to certain conditions being fulfilled.
These conditions include:
- The relevant contracting authority is supportive
- Should staff elect to transfer their accrued rights in the contractor’s “broadly comparable” scheme to the NHS pension scheme they should be offered like-for-like transfer credits or an actuarial equivalent reflecting the benefit differences in the schemes
- The relevant contracting authority is satisfied with the provider’s ability to finance any contributions that may be required in respect of the bulk transfer, including any shortfalls that may arise, and to ensure the security of any accrued rights which are to remain in the provider’s scheme
- Any net savings in pension costs as a result of the transfer, either in respect of future service or any bulk transfer shortfall funding arrangements, should benefit the relevant authority (through lower contract charges) rather than the contractor
Regulator finalises its Staff Determinations procedures
The Pensions Regulator has issued a procedure document outlining the actions it will take where the decision whether/how to make a determination is made by a member of the Regulator’s staff rather than the Determinations Panel. There already exist procedures, both for the case team and the Determinations Panel, where the determination is to be made by the Determinations Panel.
The procedure is unchanged from that issued for consultation in May (see Pensions Bulletin 2014/21). There is a “special procedure” (generally where the Regulator feels it has to use its powers urgently because of an immediate risk to the interests of scheme members or to the scheme’s assets) and a “standard procedure”.
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.
