PPF proposes another reduction in the levy
The Pension Protection Fund has released its consultation document containing its proposals for the 2016/17 pension protection levy. This time round it is a £20m reduction in the PPF levy estimate from £635m to £615m (compared to a £60m reduction this time last year).
The consultation, which closes on 22 October, is by and large limited to a few minor amendments to the levy calculation. Final details are expected to be confirmed in December.
Comment
As always at this time of year, the focus now switches to trustees and employers to first of all, assess the likely levy demand in respect of their schemes and secondly, to see whether action can be taken between now and 31 March to achieve material reductions in the levy they will be asked to pay next autumn. For further details of this important development see our News Alert.
DWP in a new drive to explain state pension reform
The Department for Work and Pensions is undertaking a “new” communications drive whose purpose is to broaden the public’s understanding of how the single tier state pension will work and how individuals can find out how it affects them.
The campaign appears to comprise the following:
- new advertisements targeting those within ten years of State Pension Age (a group that is likely also to have access to the new DC flexibilities and may wish to base decisions around their private pensions on their likely state pension); and
- updated personalised state pension statements available to those aged 55 or over on request – information on any contracted-out deduction is now included.
The DWP has also published “eight things you need to know about pensions” which focuses on the single tier state pension.
Comment
It is not clear how much new meat there is within this initiative. The personalised state pension statements have been available for some time and have generated confusion for some when deductions have been applied to reflect periods of contracted-out service. Whether the updated statements will assist to resolve this confusion remains to be seen. The old system was complex, but at least most could check that they were getting the right level of Basic State Pension. Under the new system it appears next to impossible to work out whether the DWP’s starting position for an individual’s single tier state pension is in fact correct.
Pensions Advisory Service reports on a busy year
The main theme of the Pensions Advisory Service’s annual review for 2014/15 is the increased volume of activity. That much of this increase in activity is likely to have been generated by the new DC flexibilities is illustrated both by the fact that the volume of calls and web chats in March 2015 were noticeably far in excess of the other months in the year, and by the topics most commonly raised.
The biggest development between April 2014 and March 2015 was in the number of web chats – a whopping 269% increase! The five most popular subjects discussed in this way have been cashing in pensions, state pensions, scheme entitlement, retirement planning and legal rights. Telephone calls saw a more modest, but nonetheless significant increase of 26%, with the two most popular topics being small pensions and at-retirement decisions. By contrast, the increase in written queries has been restrained – a mere 5% – with preservation being the most popular subject.
In relation to telephone calls, there was an interesting increase in annual and lifetime allowance issues, as these are starting to affect more people. Calls about tax relief and taxation generally also increased.
Comment
Given the increased media coverage of pensions in the last year or so it is unsurprising – and indeed perhaps encouraging – that the volume of queries raised with the Pensions Advisory Service has increased. This does at least show that more people are taking an active interest in their retirement savings and the options that are available to them.
Regulator issues statement for insolvency practitioners
The Pensions Regulator has issued a four-page statement whose purpose is to help insolvency practitioners understand the Regulator’s views on the appointment of trustees following employer insolvency and correctly notify the Regulator and other parties when certain events occur.
On the first point, the statement points out that the Regulator’s appointment power on employer insolvency is discretionary and its use will depend on the scheme’s circumstances. It may instead be to the benefit of the insolvency practitioner, scheme members and the creditors of the employer for the insolvency practitioner to exercise any employer power to appoint a new trustee, or itself act as a trustee (on behalf of the insolvent employer where the employer was a trustee). The statement goes on to set out what factors the insolvency practitioner should take into account when appointing a trustee and to note situations where it is not practical or appropriate for the insolvency practitioner to itself act as a trustee.
On notification the Regulator expresses concern that some insolvency practitioners are unclear about their statutory obligations to notify the Regulator (among other parties), pointing out that they have two duties to notify, set out in different acts of Parliament, which are separate and distinct (ie one is not overridden by the other).
In a separate development, the Insolvency Service has flagged up changes to insolvency law that come into effect on 1 October 2015. Of particular note is the requirement to get an estimate of fees agreed by creditors when an insolvency practitioner wishes to operate on a time cost basis, with any subsequent variation to this estimate also being agreed by creditors.
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.
