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Pension Schemes Newsletter (PSN) 123 has been published and covers some routine topics (welcome in the present climate):

Relief at Source

The deadline for submitting the 2019 to 2020 annual return of information and APSS590 declaration to HMRC has passed.

There are still returns outstanding from scheme administrators who've submitted

interim repayment claims for 2020 to 2021. Subsequent interim repayments will be withheld, pending receipt of the outstanding information.

Returns that fail processing will still be deemed as outstanding with interim repayments stopped pending re-submission. Failure for a third time will stop all future interim repayments to the scheme until a further re-submission is received and processed successfully.

The annual return of information and the APSS590 declaration for 2019 to 2020 must be successfully submitted by 30 September 2020: it should ensure HMRC can provide the correct residency status for members on the January 2021 notification of residency status report.

HMRC reminds administrators of pension schemes operating relief at source that they must submit . . .

31 Aug 2020  

In its continuing work on addressing the risks associated with climate change, the Government is seeking views on proposals to require trustees of larger occupational pension schemes and authorised master trust and collective money purchase schemes to have effective governance, strategy, risk management and accompanying metrics and targets for the assessment and management of climate risks and opportunities.

The consultation also invites responses on proposals to disclose these in line with the recommendations of the international industry-led Task Force on Climate-related Financial Disclosures (TCFD), published in 2017.

It is proposed that among the activities required would be calculating the 'carbon footprint' of pension schemes and assessing how the value of the schemes' assets or liabilities would be affected by different temperature rise scenarios,

including the ambitions on limiting the global average temperature rise set out in the Paris Agreement.

Aries comment
That word 'activities' recurs throughout the new requirements and indicates that this is not an exercise which can be satisfied merely by publishing an ESG policy. If there remain any trustees or corporate sponsors content to treat responding
. . .

28 Aug 2020  

This week The Pensions Regulator (TPR) hosted a webinar on its consultation proposals for a clearer defined benefit (DB) funding framework (where schemes will adopt either a Bespoke or a Fast Track approach to funding). David Fairs, Executive Director for Regulatory Policy, Analysis and Advice, and TPR's DB funding code team highlighted the main aspects of the consultation and answered questions.

David Fairs noted recent events had led to

calls for TPR to pause or abandon its pursuit of a new DB funding framework. This has been consistently rejected, with TPR noting that now more than ever, DB schemes need a stable long-term funding objective. It is already accepted that despite operating largely as intended, the existing regime needs to be improved.

TPR is eager that its proposals do not add to the regulatory burden on schemes. The aim is to benchmark what an effective scheme funding approach looks like.

The clarity provided should be helpful to both sponsoring and trustees. For its part, TPR recognises the need for flexibility.

The webinar largely reiterated the original proposals and emphasised the questions on which TPR seeks views. There were some interesting points of note emanating from the two Q&A sessions.

TPR refuted the accusation that . . .

27 Aug 2020  

Press reports this week have drawn attention to an interesting High Court hearing last month, of which judgment is expected in October 2020, in which the Board of the Pension Protection Fund (PPF) and Dalriada Trustees jointly asked the Court for guidance on the correct interpretation of legislation.

The case focused on the Fraud Compensation Fund (FCF), set up under the Pensions Act 2004, which replaced the Pensions Compensation Board (PCB)

from 1 September 2005. In the eight years of its existence the PCB only ever paid out three claims, viz.

* £42,104.87 in three tranches (most recent December 2001) to the trustees of the Warwick Group Pension Scheme;

* £13,906.88 on 5.8.02 to Biltons Tableware Scheme; and finally

* a total of £2,886,167, in seven tranches (the final payment of £2,376,754 on

22.12.04), to the independent trustee of the Cheney Pension Scheme (Independent Trustee Services Ltd, part of the Jardine Lloyd Thompson Group).

Although data is hard to come by, it would appear equally few successful claims have been made to the FCF in the past fifteen years. None were paid in 2019; although the PPF's most recent annual report and accounts for 2018/19 notes that four . . .

21 Aug 2020  

In 2018, HMRC succeeded in the Court of Appeal in overturning a previous decision by the Upper Tier Tribunal (UTT) in the case of HMRC v Parry & Ors, relating to a pension transfer in October 2006 by Mrs R F Staveley, two months before her death.

HMRC's stance was that both the transfer from her s.32 policy to a personal pension (PP), and subsequently omitting to take lifetime benefits from the PP, were lifetime transfers of value for Inheritance Tax (IHT) purposes. HMRC argued her actions were

designed to confer a gratuitous benefit upon her two sons (her beneficiaries on death). The UTT had found as a matter of fact that her sole motive had been to exclude the possibility of her ex-husband benefiting; thus IHT was not due on either the transfer or the omission.

Conversely, the Court of Appeal found instead that Mrs Staveley's estate had failed to prove the transfer was not made in order to reduce IHT liability. HMRC argued that she could have directed the

benefit to her own estate, which is the position taken in the IHT Manual. The one positive from the case was that Mrs Staveley's decision not to take benefits from the PP after the transfer, from 6 April 2011 was no longer justification for HMRC to levy an IHT charge.

On 19 August 2020, by a majority of 3-2, the Supreme Court partially allowed the appeal by the executors of Mrs . . .

21 Aug 2020