Government acts to limit retrospective holiday pay claims
Following the recent court judgment on the treatment of holiday pay (see Pensions Bulletin 2014/46) the Government has acted to limit the potential costs to businesses.
Regulations have been laid before Parliament that will put a two year limit on backdated claims which will apply to Employment Tribunal claims made on or after 1 July 2015. This limit applies to all claims except for those relating to statutory pay entitlements such as statutory maternity/adoption/shared parental pay, guarantee payments and payments for time off.
Workers can still make claims under the existing arrangements for the next six months. The taskforce set up by the Department for Business, Innovation & Skills to look at the impact of the judgment is continuing its deliberations on the full implications for business.
Comment
This is helpful for employers (although this may encourage a glut of claims before July) but may be of limited help in mitigating the headache for administrators of pension schemes with pensionable pay formulae including variable pay who will still need to check that benefits have been calculated correctly. It may now be best to wait until the July cut-off for claims to do this as the regulations hold out the possibility of some certainty.
FRC consults on 2015/16 draft plan and budget
The Financial Reporting Council (FRC) has published its draft plan and budget for 2015/16, in which the budget for actuarial standards and regulation will be £2.6m (as compared with the £2.3m budgeted for last year, now expected to rise to £2.5m).
The FRC has no planned significant increases in the resources required to deliver on its priorities with respect to actuarial standards and regulation. The budgetary increase is due to the inclusion of the cost of a tribunal hearing on an existing actuarial disciplinary case during 2016 requiring higher case costs.
The pension scheme and insurance levies are each expected to raise £1.2m of the 2015/16 budget (£1.05m in 2014/15).
Consultation on the draft plan and budget closes on 16 February 2015. The FRC intends to publish its finalised plan and budget in March and to confirm the levy arrangements in May.
Trivial/small commutation exercises are covered by Code of Good Practice
The Incentive Exercises Monitoring Board has published additional guidance (click through to the “Q&A on Trivial Commutation”) on its Code of Good Practice (see Pensions Bulletin 2012/25) which confirms that one-off trivial/small pension commutation exercises are generally covered by the Code due to falling within its scope, being offers to change the form of defined benefits from an occupational pension scheme which meet both of the following tests:
- One objective of the offer to reduce risk or cost for the pension scheme or sponsor(s); and
- The offer is not ordinarily available to members
The guidance has been issued now as it is anticipated that the 2014 Budget announcements are likely to have a significant impact on incentive exercises. The Board intends to conduct a major review of the Code in 2015 once government policy, legislation and market developments have become clearer.
Budget 2015, Finance Act 2015 and beyond
The date for Budget 2015 has now been confirmed as Wednesday 18 March 2015. It is clearly going to be a very busy year for tax law again. With Parliament due to be dissolved on Monday 30 March, there will be a relatively small parliamentary window in which to consolidate all the Budget provisions and the Finance Bill clauses already seen into the Finance Act 2015.
And with a General Election scheduled for Thursday 7 May 2015, we can expect a Finance (No.2) Act 2015 to be on the statute book by the summer recess.
State pension toolkit published
The Department for Work and Pensions has published “information, videos and graphics” aimed at helping people understand the new state pension arrangements coming into force from 6 April 2016.
There are videos posted on YouTube, promotional material and guidance. The guidance comprises fact sheets designed to explain the changes which will be made from next year and an 11-page guide describing the new system in some detail. There are also links to the information for employers, trustees and members of open contracted-out defined benefit pension schemes published in November (see Pensions Bulletin 2014/48).
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.
