PENSIONS NEWS

Aries monitors every development in new and proposed legislation and official guidance.   Clients are kept up to date via the website, email alerts and tweets.   Aries serves as a one-stop source of intelligence on everything that is going on and coming up.   Aries doesn't miss anything of significance.

Here is a selection from our most recent headlines. You can get the fuller details by sending us an email - just click here to fire one off.

  REVALUATION OF DEFERRED BENEFITS: 2019 ORDER PUBLISHED
The Occupational Pensions (Revaluation) Order 2019 (SI 2019/1433) has been published and comes into force on 1 January 2020.

The Order specifies the percentage by which deferred benefits coming into payment (at NPA) under a final salary scheme during the calendar year 2020 must be revalued. This depends on how many completed periods of 365 days have elapsed since the individual left pensionable service.

The "higher revaluation percentage" figure corresponds to either the rise in prices or 5% pa compound, whichever is the lower, over the whole of each period of deferment. This is the minimum increase which must be applied for a preserved pension based on pensionable service carried out before 6 April 2009.

The Pensions Act 2008 reduced the 5% 'cap' to 2.5% compound per annum for pension based on service from 6 April 2009, though schemes may continue

to use the higher cap under scheme rules. Thus the second column of figures (the "lower revaluation percentage") represents the lower of the rise in prices or 2.5% pa compound over the period.

Note that in the case of a formerly contracted-out scheme, this revaluation does not apply to any GMP element of benefits accrued to 5.4.97. GMPs are separately revalued . . .

01 Nov 2019  

  SIMPLER ANNUAL BENEFIT STATEMENTS
Having previously endorsed work done by the industry to develop an approach to simpler annual benefit statements, the Government has commenced a consultation seeking views to achieve the goal of workplace pension benefit statements that are shorter, simpler and easy to understand.

The consultation is structured around several main issues:

  • Seeking views and evidence on the

principle of short, simple, statements and how adoption can be delivered through voluntary or mandatory approaches.

  • The presentation of information on costs and charges that can help members identify what they have paid for their pensions.

  • Ownership of the guidance on the assumptions used in statements and how they can help members identify if their savings are on track.

  • The relationship of simpler statements with innovative communication tools, including pension dashboards.

The DWP proposes three possible approaches: . . .

01 Nov 2019  

  PSN 114: GMP EQUALISATION GUIDANCE FOR CHRISTMAS
Slightly later than has become convention, HMRC has published Pension Schemes Newsletter 114. It contains an update on progress exploring a number of pension tax issues arising from GMP equalisation. HMRC has been focussing on trying to resolve tax issues using the existing pension tax legislation and supported by further guidance as appropriate. A complex piece of work then and HMRC acknowledges it may not be able to resolve all of the issues in this way. Indeed, it may need to consider some

individuals on a case-by-case basis depending on their particular circumstances (which sounds a bit like discretion). In December 2019, HMRC aims to publish high-level guidance specific to GMP equalisation on:

  • lifetime allowance (LTA)
  • LTA protection regimes including enhanced, fixed, primary and individual protection; and
  • annual allowance.

In the meantime, work continues.

The Newsletter provides interesting statistics on pension scheme registration and on pension flexibility.

For the period 6 April 2019 to 30 September 2019, HMRC received 903 applications to register new pension schemes – slightly down on the same period last year. The application was refused for 11% of these, with 16% . . .

01 Nov 2019  

  TPR ROUNDUP
In August 2019, the House of Commons Work and Pensions Committee wrote to The Pensions Regulator (TPR) asking questions about press reports of potentially high costs paid to TPR-appointed trustees. TPR responded:

  • TPR runs a competitive tender process to select trustees that can provide the best value for money, matching experience with the circumstances of the proposed appointment.

Submitted tenders include the plan, timescale and costs.

  • Typically, three tenders are received. The main priority for TPR is the suitability of the appointment, with the cost to members being secondary.

  • On the possibility that tax and charges incurred could have been lower if TPR had not intervened: TPR thinks that highly unlikely,

as there is usually evidence of far more damaging pension scam activity.

  • Trustees on TPR's register agree to have costs and fees scrutinised by an independent adjudicator and be bound by that adjudicator. Any cost variance between trustees will be challenged by TPR.

  • Scheme members not satisfied with the performance of . . .

30 Oct 2019  

  REVISED STEWARDSHIP CODE
After consultation earlier this year, the Financial Reporting Council (FRC) has now revised its voluntary UK Stewardship Code, which takes effect from 1 January 2020.

The Code consists of twelve Principles for asset managers and asset owners, and six Principles for service providers. Reporting expectations indicate the information that should be publicly reported in order to become a signatory to the Code.

Organisations wanting to become signatories to the Code will be required to produce an annual Stewardship Report explaining how they have applied the Code in the previous year. The FRC will evaluate Reports against the assessment framework.

Key changes of the 2020 Code include:

  • An extended focus that includes asset owners, such as pension funds and insurance companies,

and service providers as well as asset managers.

  • A requirement to report annually on stewardship activity and its outcomes. Signatories' reports will show what has actually been done in the previous year and the outcome, including engagement with the assets and voting records.

  • Signatories will be expected to . . .

30 Oct 2019  

 
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