DWP steps up its communications campaign
There have been a number of announcements this week by the Department for Work and Pensions (DWP) in relation to imminent pension reforms.
- With details of the “guidance guarantee” expected soon, pensions minister Steve Webb has begun a series of weekly radio phone-ins this week to give local radio listeners in every part of Britain the chance to quiz him, in the run up to next April, on the Government’s pension reforms
- The DWP has also launched PensionTube, a new online hub within YouTube, bringing together content from the Government and trusted independent sources, which in time is intended to cover the whole spectrum of pension-related issues
- A major advertising campaign, themed “Your Pension, Your Future”, is also being launched this week to raise awareness of the changes affecting state pensions (see Pensions Bulletin 2014/41). Related to this, the DWP has published “Your State Pension explained” – guidance on the new state pension aimed at the general public
- Finally, the DWP has published guidance aimed at sponsoring employers, trustees and members of open contracted-out defined benefit (DB) pension schemes who are facing the end of contracting out on 5 April 2016. The guidance explains what’s changing and what employers and trustees, in particular, must do to prepare
Significant increases to PPF administration levy proposed
The Department for Work and Pensions (DWP) is consulting on plans to increase the rates of Pension Protection Fund (PPF) administration levy from next April.
The Pension Protection Fund (PPF) administration levy is charged to schemes eligible for PPF protection and is primarily intended to meet the DWP’s administration costs in respect of the PPF. The rates of this levy are set in regulations and the current rates – which were in fact a reduction on the previous rates – were introduced with effect from 1 April 2012 (see Pensions Bulletin 2012/10).
The DWP considers four options in its consultation paper, but proposes to go with the fourth – an increase in the PPF administration levy rates in steps of 15% in each of the next three years in order to eliminate what would otherwise become an increasing gap between the PPF’s increased administrative costs (given its growth in recent years) and the funding it would receive from current levy rates. The expectation is that these levy rates would eliminate the funding deficit by 2021/22.
There are currently no plans to increase the general levy, which recovers the administration costs of the Pensions Regulator, the Pensions Advisory Service and the Pensions Ombudsman.
The deadline for responses is 9 January 2015.
Bank of England warns inflation could drop below 1%
In its latest inflation report, the Bank of England warned that inflation could fall below 1% in the next six months, owing largely to the sharp fall in global commodity prices as well as disappointing growth, particularly in Europe. Governor Mark Carney said he does not expect inflation to reach the targeted rate of 2% for around three years.
Predicted UK economic growth in 2015 has also been cut, to 2.9%, but there is an expectation that average real salaries could grow by 2% pa by the end of 2015.
Regulations made to recover outstanding PPF levies from Crown guarantee schemes
The Payment of Pension Levies for Past Periods Regulations 2014 (SI 2014/2939) come into force on 8 December 2014 and make provision to recover Pension Protection Fund levy payments previously exempted in respect of pension liabilities covered by a Crown guarantee.
This follows the Court of Justice of the European Union’s ruling (in the case of the BT pension scheme) that such an exemption amounts to unlawful State aid, incompatible with the common market (see Pensions Bulletin 2014/45).
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.
