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Pensions bulletin

Pensions Bulletin 2020/45

Pensions & benefits Policy & regulation

Committee stage reached for the Pension Schemes Bill

Part of the Committee stage debate on the Pension Schemes Bill took place in the House of Commons on 3 November with three topics being addressed – the proposed law surrounding collective money purchase schemes, the extended powers for the Pensions Regulator, and the legislation introducing pensions dashboards.

Collective money purchase schemes

The morning session started with a discussion on various aspects of this proposed legislation which makes up the bulk of the Bill. The Lords’ amendment requiring the trustees of such schemes to assess and report to the Pensions Regulator the extent to which the scheme is operating in a manner fair to all members (see Pensions Bulletin 2020/27) was rejected without being put to a vote.

Extended powers for the Pensions Regulator

The session then moved on to consider the various topics under the above heading. The legislation relating to contribution notices where there is avoidance of employer debt was supported, but there was concern by opposition MPs as to whether the proposed sanctions set out in Clause 107 had a scope that went too far, with two amendments being proposed by Scottish National Party MPs who had been working with the Institute and Faculty of Actuaries, in order to protect professional advisers from criminal liability for carrying out their role. These amendments were lost on being put to the vote. In rejecting the amendments, Guy Opperman said that there would be further regulation and consultation by the Pensions Regulator on this topic, but “there has to be a capability to identify and then prosecute and bring action against all persons, if they are found to have committed an offence without reasonable excuse”.

The afternoon session continued on the topic of Clause 107 where concern over the scope of its provisions continued to be expressed by opposition MPs. However, it seems that Parliament has now had its say on the matter and so we must await the Regulator’s guidance.

Pensions dashboards

The discussion then moved on to pensions dashboards on which a number of amendments to the Bill had been proposed and on which there was a lengthy debate. During this, Guy Opperman indicated that he is hopeful of another Pensions Bill before the end of this Parliament and he is assuming that such a Bill would definitely contain law on consolidation of DC pots, transfers between providers, and “potentially the raising or lowering of … contributions to an individual pension”. It is not clear what is meant by this last phrase.

The two Lords’ amendments in relation to pensions dashboards (see Pensions Bulletin 2020/27) were rejected after being put to a vote. They were: a requirement that any pensions dashboard service does not include a provision for financial transaction activities; and a requirement that the MaPS service operates for a year and the Government reports to Parliament on its operation and effectiveness before commercial dashboards can start to operate.

Committee stage should conclude after two further sittings on 5 November, with three main topics to be discussed – the revised DB funding regime, climate change risk, and restricting an individual’s right to transfer to another scheme in the context of pension scams. After this the Bill moves to Report stage and Third Reading before going back to the House of Lords.

Comment

This is a Bill that is fast entering its final stages with Royal Assent surely now inevitable well before Christmas. Attention will then turn to the timetable for commencing the various aspects of this new law – some are likely to take time, such as that on collective money purchase schemes, whilst much of the Regulator’s extended powers can be brought in quickly.

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Furlough scheme extended – Job Support Scheme deferred

As an immediate consequence of the lockdown in England announced on 31 October by the UK Government the Coronavirus Job Retention Scheme has not closed on 31 October, but remains open until 30 November, with eligibility now being determined for this further month according to whether the individual was on the employer’s payroll on 30 October. In November the Government will pay 80% of the month’s wage up to a cap of £2,500, employers will pay employer national insurance and pension contributions. November is a repeat of the August payment scale and is therefore more generous than September and October’s scale where the Government covered 70% and 60% of wages (subject to a cap) respectively.

The Job Support Scheme, which was due to replace the Coronavirus Job Retention Scheme on 1 November (see Pensions Bulletin 2020/44), has been deferred until after the latter closes.

Comment

For those covered by the furlough scheme the Government has not covered minimum pension contributions since July, so this latest extension to the scheme should have little if any implications for contribution processing.

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Covid-19 related announcements

Since last week’s Pensions Bulletin, announcements and posts influenced by the Covid-19 health emergency in the world of pensions include the following:

  • With very unfortunate timing, on 30 October the Pensions Regulator updated its automatic enrolment and DC pension contributions guidance, last amended in June (see Pensions Bulletin 2020/25) in order to reflect the closure of the Coronavirus Job Retention Scheme on 31 October (now continuing until the end of November) and to acknowledge the Job Support Scheme (now deferred) and the Kickstart scheme. The previous guidance on the Coronavirus Job Retention Scheme was removed. The new guidance reminded employers that their auto-enrolment duties continue to apply as normal, whether or not support is being received as part of the Job Support Scheme (JSS) or the Kickstart scheme. The new guidance also confirmed that under the JSS Open Scheme pension contributions will need to be calculated on all pay received by the employee – ie that from pay for hours worked and the employer and Government’s contributions towards pay for hours not worked. However, on 2 November, in the light of the Government’s lockdown announcement, the Pensions Regulator reverted largely back to its pre 30 October guidance
  • On 30 October the Pensions Regulator also made major changes to its DC pension contributions Covid-19 technical guidance for large employers, for the same reason as above, only to have to retrace its tracks with a further update on 2 November. The short-lived guidance made clear that as the rules of both JSS schemes do not allow those wages covered by the Government grant to be reduced by any salary sacrifice this could mean that payroll processes associated with a pension salary sacrifice may need to be adjusted
  • The latest HMRC pension schemes newsletter reprises an earlier message that “the coronavirus period” came to an end on 1 November. This is the period during which a return to work can take place to assist with the emergency, without the individual suffering pensions tax penalties, for those having previously exercised a right to take an occupational pension scheme before normal minimum pension age. The newsletter also covers a number of other topics, mainly of an administrative nature

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