Not so fast for the Dashboard
The likelihood that a pensions dashboard of some sort will be in place by 2019 is fast receding, as the DWP takes over responsibility from the Treasury on what to date has been a project managed by the Association of British Insurers.
First announced in the 2016 Budget, by October 2017 the ABI had delivered a prototype and set out a roadmap of what needed to be done to get the system up and running (see Pensions Bulletin 2017/43). Shortly after this it was announced that the DWP was taking over responsibility for the project from the Treasury.
The DWP is now undertaking a feasibility study, as part of which it will be thinking through what purpose the dashboard is intended to serve and how best to deliver it. Assisted by a number of workshops, held in December, the intention is for this study to be published by the end of March and for it to contain a credible implementation plan that will take place over the next few years.
Comment
As the ABI report last year made clear, there are a number of decisions that Government must shortly take if the dashboard project is to make progress. Hopefully the results of the DWP’s feasibility study will provide the necessary impetus within Whitehall for this to happen.
David Gauke leaves DWP but Guy Opperman remains
David Gauke’s tenure as Secretary of State for Work and Pensions has been one of the shortest on record – appointed following the June 2017 General Election, he has now become Justice Secretary as part of Theresa May’s cabinet reshuffle. Replacing him at the DWP is Esther McVey who has been promoted from deputy chief government whip.
Guy Opperman remains at the DWP as minister for pensions and financial inclusion.
In a separate development, the shadow pensions minister, Alex Cunningham, resigned last week. His replacement has yet to be announced.
Comment
We are slightly perturbed to see that we are now on the fifth Work and Pensions Secretary in less than two years. This is a brief notoriously hard for ministers to quickly come to grips with. Sadly, it looks like the continuity in DWP pensions policymaking of the coalition years is starting to look like a thing of the distant past.
How to plug the gap in the National Insurance Fund
The Government Actuary’s Department has produced some commentary on the implications of the National Insurance Fund running out of money in the 2030s as projected in its latest five yearly report published last October (see Pensions Bulletin 2017/44). Its comments have generated some press coverage.
As we noted in October, GAD shows that the current system of financing the State Pension is not sustainable; even if increases in State Pension Age are accelerated and the “triple lock” is abolished the Fund will still run out of money in the 2030s.
GAD points out that sustainability can, therefore, only be achieved by increasing the Fund’s income. This can be done either by increasing the national insurance contributions paid by workers and employers (but not pensioners) by about 5% or by increasing the Treasury Grants (financed either by general taxation or borrowing).
Comment
As GAD notes, these are political decisions. While the 2030s look a long way off we may be able to see the outline of political battle lines starting to form given the currently topical political and media narrative around intergenerational fairness or the lack thereof.
HMRC tidies up information regulations
Regulations have been laid before Parliament making changes consequential to the reduction in the money purchase annual allowance from £10,000 to £4,000 pa.
Currently, regulations require the scheme administrator of a registered pension scheme to provide a statement to a member on first flexibly accessing a money purchase arrangement that amongst other things needs to make reference to the £10,000 allowance. This figure is now changed to £4,000. A similar change is made in relation to the statement that the scheme manager of certain QROPS (or former QROPS) must provide to a member where it appears that they are first flexibly accessing a money purchase arrangement.
There is also a necessary extension to the mention of £10,000 amongst the details that have to be contained within the pension savings statement that must be supplied (normally by 6 October following the end of the relevant tax year) by the scheme administrator of a registered pension scheme to a member where the allowance has been breached.
Finally, the regulations introduce a new reportable event where a scheme ceases to be or becomes a master trust scheme. This is intended to assist HMRC in considering the registration of the scheme.
The Registered Pension Schemes and Overseas Pension Schemes (Miscellaneous Amendments) Regulations 2018 (SI 2018/5) come into force on 30 January 2018.
Comment
The money purchase annual allowance changes are all in the nature of essential housekeeping by HMRC consequential to decisions that have already been taken, but scheme administrators will need to review their processes to ensure that the statements they generate remain compliant – with a particular urgency in relation to the ”on first flexibly accessing” statements.
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.
