FCA puts back its retirement outcomes review
In an update issued on 25 November, the Financial Conduct Authority has put back its proposed “retirement outcomes review” that was flagged in its October consultation on changes to the rules for pension providers to take account of the new “freedom and choice” regime (see Pensions Bulletin 2015/43). This review will now be launched in the second quarter of 2016.
The update also sets out the request for information that the FCA has sent to a range of firms offering access to pension products that allow customers to take flexible incomes. The FCA wishes to establish whether there is a significant variation in the level of charges levied between firms for similar products and services, and the extent to which the charges that consumers face may be complex and difficult to understand. The FCA will also analyse whether higher charges are concentrated among particular pension pot sizes. The FCA intends to publish a summary of its findings in summer 2016 and feed the results of the exercise into its delayed retirement outcomes review for further analysis.
New state pension – draft legislation fills in some gaps
Draft legislation has been laid before Parliament making a number of technical adjustments to the legislation governing and consequential to the operation of the single tier state pension that comes into effect for people reaching state pension age on or after 6 April 2016.
The State Pension and Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2016 implement further detailed features of the new state pension scheme, in particular, setting out how the pension increase earned through deferring the new state pension is to be calculated, and also providing that an “overseas resident” is not entitled to up-rating increases, including any that came into effect while deferring their state pension.
The regulations also rectify a procedural error made earlier this year in relation to the refreshing of existing law dealing with survivors’ benefits in an occupational pension scheme where a GMP is converted into ordinary scheme benefits.
The Pensions Act 2014 (Consequential and Supplementary Amendments) Order 2016 amends legislation to both reflect the fact that those who reach state pension age before 6 April 2016 will continue to receive their state pension under the old state pension system and to extend various existing arrangements to encompass the new state pension. The most significant of these relate to the calculation of a state pension for a widowed person who reached state pension age before 6 April 2016 but whose deceased spouse or civil partner was in the new state pension system.
The remaining secondary legislation that will need to be in place by 6 April 2016 includes new regulations to set the start rate of the new state pension and provide for national insurance credits for spouses and civil partners of armed forces personnel to cover past periods of accompanied service overseas. Further secondary legislation is also needed to extend provisions to do with claims, decision-making and other administrative matters to the new state pension, make other minor consequential amendments and amend reciprocal agreements about state pensions between Great Britain and other countries.
Increases to State benefits confirmed
The Department for Work and Pensions has published a schedule which sets out the social security benefit rates from April 2016. In particular it now confirms that:
- The Basic State Pension from April 2016 will be £190.80 pw for pensioner couples; and
- SERPS/S2P benefits in payment in 2016/17 will not increase (as the annual rate of CPI inflation in September 2015 was -0.1%)
2016 Budget date announced
HM Treasury has announced that next year’s Budget will be held on 16 March 2016.
Comment
And so we now have the key date by which we expect to hear the Government’s decision on how it intends to go forwards with the taxation of pensions.
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.
