Our corporate plan for 2014 to 2017 has been signed off by the Board. Our 5 strategic objectives are:

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1 UPDATE MAY 2014 CORPORATE PLAN Our corporate plan for 2014 to 2017 has been signed off by the Board. Our 5 strategic objectives are: To position us as the primary source of impartial pensions information and insight To increase awareness of our services so that more people are better informed on pensions To deliver our services more effectively and efficiently To develop our technical and communication skills to reach and serve our target audience To grow our volunteering culture by recruiting, retaining and recognising volunteers We look forward to working with all of you to achieve our objectives. A copy of the corporate plan will be sent to advisers once it is agreed by the Department for Work and Pensions. TPAS ON THE ONE SHOW Chief Executive Michelle Cracknell appeared on the One Show on Wednesday 5 th January to talk about the dangers of Pension Liberation. We are receiving around 100 calls a month on our helpline about Liberation. The majority of calls are from people who have been refused a transfer because their pension provider suspects that the transfer may be to a Liberation scheme. Once we explain why the transfer has been refused most callers are content not to pursue the matter further. Unfortunately we have also been contacted by a number of people who have already gone ahead but have not received the promised cash sum and have been unable to contact the people who arranged the transfer for them. We suspect they have been victims of fraud and the chance of recovering their pension fund is small. Page 1

2 MARK HOBAN MP VISIT Mark Hoban MP visited TPAS on Wednesday 5 th January. Mr Hoban met members of the senior management team and was particularly interested to hear about the questions we deal with from members of the public as they approach retirement and the types of complaints we handle. He tweeted about his visit, helping raise awareness of what we do. We also presented to the All Parties Pensions Committee and had a session with MP case workers. TECHNICAL UPDATE BUDGET 2014 The Chancellor proposed sweeping changes to the pensions tax regime in his budget statement on 19 March, to come into force from April Here is a quick run-down of the proposed changes: Full fund withdrawal at retirement. The government intends to allow, from April 2015, that members of DC schemes will be able to access their pension fund in full without the need to purchase an annuity. They will be taxed at their marginal tax rate, rather than the 55% rate currently applied. Access to free financial advice. As part of this change the government wants to ensure that all individuals making the decision on how to draw their fund have access to good quality, free and impartial, face-to-face advice. A new "guidance guarantee" will be introduced so that all individuals with a DC pension approaching retirement will be offered advice to assist their decision-making. A new duty on pension providers and schemes to deliver this guarantee will be introduced by April Increase in normal minimum pension age. Currently, the minimum age that most members are able to access their pensions savings is 55. The government is proposing increasing the minimum age at the same rate as the increase in the state pension age. But so that individuals can plan ahead, it is proposed that the first increase would be in 2028 when the earliest age you can draw your pension benefits would rise to 57. It will still be possible for schemes to offer retirement at an earlier age due to ill health. Taxation of pension fund on member's death. The government considers that the current 55% tax charge for pension funds held at death for those under age 75 and aggregate tax charges of up to 82% for those over age 75 needs to be reviewed to ensure they are appropriate under the new flexible access regime. It considers that the flat 55% rate will be too high in many cases given that everyone with DC pension savings will now have the freedom to enter into drawdown rather than take an annuity. Page 2

3 Prohibition on DB to DC transfers. For public sector pension schemes, the majority of which are unfunded, the government intends to introduce legislation to remove the option to transfer from a public service defined benefit (DB) scheme to a DC scheme, except in "very limited circumstances". For private sector DB schemes, the government s starting point is to remove the (statutory) right to transfer, except in exceptional circumstances, to a DC scheme. The Treasury is consulting on how to implement these proposals. More will become known over the coming months. In addition to the 2015 proposals, a number of changes were put into effect as from 27 March 2014, as follows: An increase in the maximum annual amount that can be taken under capped income withdrawal cap from 120% to 150% for all pension years starting on or after 27 March This will be subject to the pension scheme's rules permitting such payments. An increase in the trivial commutation limit from 18,000 to 30,000. An increase from 2,000 to 10,000 in the maximum lump sum that can be paid in exchange for all pension rights from one registered pension scheme regardless of savings in others. In addition, the maximum number of DC pension pots that can be commuted in this way will rise from two to three. The minimum income requirement for flexible drawdown will drop from 20,000 to 12,000. This is the minimum level of income that a person must have from other sources before he/she can take advantage of flexible drawdown. LGPS 2014 The new Local Government Pension Scheme (LGPS 2014) started on 1 April, applying to all new entrants to local government employment (in England and Wales) from that date, and to service from that date for existing members of the LGPS. We published a brief guide to the scheme in the July 2013 edition of Update. Since then, the LGPS has produced a website dedicated to explaining the new scheme. A handy page showing the differences between the 2014 and the 2008 schemes can be found here: What is not explicit from those pages is the fact that members have the right to take early retirement from the LGPS 2014 (with actuarial reduction) whereas under LGPS 2008 employer consent was needed. We understand, at time of writing, that administrators are currently able to provide early retirement quotes under LGPS 2014, but they are still awaiting GAD guidance and factors before they can calculate transfer values under the new scheme. Page 3

4 SAME SEX MARRIAGE The majority of the provisions of the Marriage (Same Sex Couples) Act 2013 have come into force as of 13 March The Act enables same sex couples to marry under the law of England and Wales and civil partners to convert their civil partnership to a marriage. Same sex partners will be entitled to benefits calculated on the contracted-out part of their partner's pension in respect of all service on or after 6 April 1988, as well as survivor's benefits in respect of pensionable service completed on or after 5 December The Marriage (Same Sex Couples) Act 2013 (Consequential Provisions) Order 2014 (SI 2014/107) makes various amendments to pensions legislation to reflect the coming into force of the Act. For practitioners, the most significant change is to the Occupational Pension Schemes (Modification of Schemes) Regulations 2006 (SI 2006/759) to allow trustees to modify their scheme by resolution to provide for payments to be made to a surviving same sex spouse. With effect from the date of the Order, such a change will be exempt from section 67 of the Pensions Act 1995, regardless of whether or not it would otherwise infringe section 67. Any modification to provide benefits in excess of those detailed in the Order will require the consent of the sponsoring employer. TUPE PENSION PROTECTION slight modification Changes to pension protection rules, on a TUPE transfer of employees, came into effect on 6 April The changes have been made to match the requirements of automatic enrolment. The changes means the new employer will not be required to pay matching contributions up to 6% of pensionable pay, as previously required, but will instead will have the option of matching the contributions paid by the former employer. TAX ROUND-UP The Lifetime Allowance has reduced from 1.5m to 1.25m with effect from 6 April It was possible to protect yourself from this reduction by applying to HMRC for 'fixed protection' by 5 April The Annual Allowance has reduced from 50,000 to 40,000 with effect from 6 April PENSION LIBERATION While we await the first determinations from the Pensions Ombudsman, HMRC has been amending its procedures with a view to curbing pension liberation activity. On receipt of a new application to register a pension scheme, schemes will have 45 days to submit any further details requested by HMRC or the application will be rejected. HMRC will respond to requests for confirmation of a scheme's registration on a transfer and won t seek consent from the receiving scheme. But, HMRC will only confirm if the receiving scheme is registered and the information held "does not indicate a significant risk that the scheme was set up, or is being used, to facilitate pension liberation". Page 4

5 In other cases, HMRC will state that one or both of the conditions are not satisfied and will set out the conditions in which they will confirm registration status. In addition, from 20 March 2014 HMRC can require the pension scheme administrator and other persons (via information notices ) to provide documents and other information to help HMRC decide whether or not to register a pension scheme. From 20 March 2014 (under the 2014 Finance Act) HMRC can impose a penalty if false information is provided in connection with an application for registration. FA 2014 also gives HMRC power to refuse a new registration, or de-register an existing scheme, if HMRC suspects that the scheme will not meet the new requirement that it must be set up and maintained for the main purpose of providing authorised pension benefits. PENSIONS REGULATOR/ FCA GUIDE CLARIFIES REGULATORY RESPONSIBILITIES A new guide, published jointly by the Pensions Regulator (TPR) and the Financial Conduct Authority (FCA), clarifies the regulatory focus and approach of each regulator and explains how they interact to manage overlaps in regulatory structure and shared risks in the regulation of workplace DC pensions. Where both regulators have regulatory remit, for instance in relation to contract-based pension schemes, the guidance explains that TPR is more likely to take the lead on issues with an individual scheme whereas the FCA will take the lead on issues with the pension provider. They may also launch joint investigations where there are potential implications for both regulators. The guidance, aimed at trustees, advisers and pension providers, also sets out which regulator is responsible for regulating individual parties involved in DC pensions, such as employers, advisers, trustees, master trusts, fund managers, product providers and thirdparty administrators. However, the guidance notes that the potential for duplication does not generally arise since, in practice, most participants in the DC market interact with only one of the regulators. The guidance also reiterates that the FCA and TPR have a memorandum of understanding, setting out their respective regulatory responsibilities under the Financial Services and Markets Act 2000, the 2004 and 2008 Pensions Acts, and other relevant legislation. TPAS WEBSITE AND ADVISER SECTION Demystifying DC In March, JLT came to present on the myths and realities of the DC pensions world for the benefit of advisers and staff who have had little or no experience of DC schemes. A copy of the comprehensive slides can be found in the Adviser section of our website: see the Pensions briefing notes page, under the simple heading of DC training March New leaflet When a relationship ends We ve produced a new guidance leaflet on what people whose marriage or civil partnership ends need to consider with regard to their pension rights and options. This is available through the publications page of our public website. Page 5

6 LEGAL UPDATE Appeals against Pensions Ombudsman decisions A change to the Civil Procedure Rules (CPR) introduces a new requirement for parties appealing against determinations of the Pensions Ombudsman and the Pension Protection Fund Ombudsman (PPFO). From 6 April 2014, the Civil Procedure (Amendment) Rules 2014 (SI 2014/407) provides that permission will be required from the High Court for any appeals against determinations or directions of the Pensions Ombudsman and the PPFO in respect of appeals filed on or that date. Before 6 April 2106 parties could make an appeal based on issues of law under section 151(4) of the Pension Schemes Act Accepting FOS award precludes further litigation In the case of Clark & Clark v In Focus, the Court of Appeal held that it is not possible to collect an award from the Financial Ombudsman Service (FOS) and then litigate the same matter in court. Mr and Mrs Clark lost more than 300,000 through negligent investment advice by their financial advisor. They took their complaint to FOS who decided that they were entitled to compensation exceeding the then limit of 100,000 (now 150,000) and recommended the payment of full compensation. The Clarks accepted the award, subject to their right to claim more in court proceedings. In Focus paid the 100,000, but declined to pay the full amount. The Clarks took the matter to the County Court but In Focus succeeded in dismissing the case on the grounds of merger, i.e. a cause of action which entitles one person to obtain from court a remedy against another. The effect of merger is that a claimant cannot bring a second set of proceedings to enforce his cause of action even if the first tribunal awarded him less than he was entitled to. On appeal, the High Court judge disagreed with the previous judgement, thus creating conflicting High Court authorities on the topic. The Court of Appeal argued on the grounds of res judicata, i.e. if a court or tribunal has already adjudicated on the matter, this precludes a party from bringing another set of proceedings. The Clarks had the option of rejecting the FOS award of 100,000 and taking legal action. By accepting the award, it precluded them from taking legal action on the grounds of res judicata and merger. Page 6

7 Latest on the Impact of Civil Partnerships and Same Sex Marriages on Pension Schemes Mr Walker retired in 2003 and received a pension of about 85,000. His civil partnership to his long term partner was registered in When he asked about pension rights for his civil partner in the event of his death, he was told that under Equality Act 2010, the exemption under paragraph 18(1), schedule 9 would apply. In other words civil partners will be treated in the same way as married couples for any pensionable service since 5th December As Mr Walker's retired in 2003, this meant his civil partner would receive only a small pension based on his contracted-out rights, of around 500, instead of 41,000 if he had been married to a woman of same age as his civil partner. Mr Walker took a complaint to an Employment Tribunal. His complaint was upheld on the basis that he had been directly and indirectly discriminated against under European case law. His former employer, Innospec, appealed and the Employment Appeals Tribunal (EAT) found in its favour. The EAT ruled that although the exemption is direct and indirect discrimination, it is compatible with EU law. Mr Justice Langstaff concluded that the tribunal was wrong to think that the exemption was incompatible with EU law and said that the law did not have retrospective effect in the field of sexual orientation, any more than would have been the case of a claim for previous inequality of pay based on sex, which arose before the acceptance of the right of equal pay, would have given rise to a claim for back pay, or pension entitlement based upon it. The law allowing same sex marriage came into force in March However, the same sex spouse is treated in the same way as civil partner regarding their pension survivor benefits. This difference in treatment of same sex survivor against the opposite sex survivor is under review and the outcome scheduled to be published on 1st July Estoppel could not be invoked as Pension Scheme Amendments were not validly executed In the case of Briggs and others v Gleed and others, the High Court judge held that estoppel could not be invoked as a large number of amendments to the pension scheme were not validly executed. The scheme's principal employer was a partnership, and the deeds all failed to meet the requirements of the Law of Property (Miscellaneous Provisions) Act 1989 (LPMPA 1989), specifically by failing to have partners' signatures attested by a witness. The deeds in question covered areas including equalising benefits between the sexes, replacing trustees, amending the scheme's benefit structure, adding two money purchase sections and closing the final salary section to further accrual. The employer claimed that they had been advised by consultants who represented that the deeds could be executed in the manner appropriate for a limited company. The employer relied on these representations to its detriment and this gave rise to an estoppel by representation, precluding the trustees and members from challenging the way the deeds were executed. The judge agreed that an estoppel by representation could in principle be based on a representation of law, but held that an estoppel did not arise as the relevant deeds did not comply with the Law of Property (Miscellaneous Provisions) Act Other claims that members were bound to accept reduced benefits by virtue of extrinsic contracts or estoppel by convention also failed. Page 7

8 The consequences for the scheme and employer are serious as some employees who thought they had joined the scheme following the introduction of the money purchase section in 1997 never became members, and others who thought their benefits had been reduced now stand to receive a windfall. PENSIONS OMBUDSMAN DETERMINATION In the determination to a complaint brought by Mr M Hawkins, Mr S Hawkins and Mr J Hawkins (PO-2753) the Ombudsman found that a decision made under a discretionary power to distribute death benefits could not be retaken without a court or ombudsman s decision to set aside the original decision. The complaint concerned Friends Life s change of decision [to split the proceeds between the three sons of Mr M Hawkins] and subsequent attempt to recover monies. The Ombudsman determined that as the original decision had not been set aside by either a court of ombudsman the original decision remains valid. In my judgment Friends Life therefore cannot seek to recover any monies unless their original decision is legitimately set aside. A fuller summary will be included in the next Ombudsman Watch. TPAS IN THE MEDIA We continue to build on the success of Michelle appearing on Watchdog in October and the mention TPAS received on the Martin Lewis Money Show in January Michelle and also Charlotte Jackson, Head of Information and Guidance, have featured in TV and Radio broadcasts far and wide on a range of issues. In particular BBC Radio Ulster, BBC Radio 4 Moneybox live, when we discussed divorce and on another appearance retirement income choices; Global Radio, BBC Radio Wiltshire, and Waking up West Midlands where we discussed women and pensions issues; and Age UK Radio As you will no doubt be aware the Budget of 19 March 2014 introduced proposals for greater freedom and member choice. We appeared on the following stations helping to outline the significant changes. BBC Radio Lancashire, BBC West Midlands, BBC Radio 5 Live, Radio Ulster, BBC Radio 4 - Money Box Live and Sky News We will continue to look for opportunities to appear in the media in the coming months to raise our profile as the go to place for pensions. Page 8

9 WEB CHAT Our web chat service continues to be popular and as well as being available Monday to Friday 9am to 5pm is made available Tuesday evenings between 7pm and 9pm. CODE OF PRACTICE Further to the note about face to face contact in the last Update the code of practice now includes TPAS does not have facilities to meet customers face to face and our insurance was agreed on the basis that neither TPAS staff nor volunteers meet customers in person. You are therefore asked to observe this in order to avoid putting yourself and TPAS at risk. The adviser guidance notes have been updated and can be viewed in the adviser section of the website. OMBUDSMAN WATCH Each month a round-up of the previous month s determinations made by the Pensions and Deputy Pensions Ombudsman are placed in the adviser section of the website. It s now also possible to subscribe and have the round-up sent to you once it is ready. To subscribe, login to the adviser section of the website, click on adviser mailing list in the left hand menu, and then tick Ombudsman Watch. SKILLS SURVEY AND FEEDBACK You should have received an from Cathy inviting you to complete two surveys. The skills survey will help improve the support and training we give. It will also help ensure that cases which would benefit by being handled by advisers with relevant experiences get to the right advisers. The more responses we receive the more useful the information collected will be. We would therefore be gratefully if as many advisers as possible complete the surveys. Both surveys close on 16 May. Thank you. Page 9