UPDATE SEPTEMBER 2015

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1 UPDATE SEPTEMBER 2015 ANNUAL REPORT & ACCOUNTS Over 100,000 people were helped We dealt with a 26% increase in telephone calls There was a 13% increase in complaints There was a 17% increase in complaints we accepted for investigation There was a 269% increase in webchats ANNUAL REVIEW Our annual review was published on 18 September. It can be viewed at: Our annual report and accounts was published on 2 July. WORKSHOPS dates for your diary DATE LOCATION TIME VENUE Wednesday 4th November London1 09:00am TPAS Office Thursday 5 th November London 2 12:30pm PMI House Tuesday 10 th November London 3 5:30pm TPAS Office Thursday 12 th November Birmingham 1pm Wragge Lawrence Graham & Co Thursday 12 th November Bristol 1pm Burges Salmon Friday 13 th November London4 12:30pm TPAS Office Wednesday 18 th Leeds Leeds 12-30pm The Pension Trust Thursday 19 th November London pm TPAS Office Friday 20th November Edinburgh 12-30pm Standard Life Tuesday 24 th November Basingstoke 1.30pm AXA Sun Life Thursday 26 th November Manchester 1pm DLA Piper Page 1

2 ADVISER OF THE YEAR Geraldine Eggleden is our adviser of the year for 2014/15. Geraldine regularly attends our office, usually once a week, to work on dispute cases. In 2014/15 she completed an incredible 73 cases. An achievement she should be very proud of and for which we are very grateful to her. NEW FELLOWS Diana Geneen, Simon Mayho and Martin Johnson have all been awarded TPAS Fellowship PENSIONS OMBUDSMAN non-financial injustice The new Pensions Ombudsman has issued guidance on his approach to compensation for nonfinancial injustice. See: The Pensions Ombudsman Service has published their annual report for 2014/15. There was a 21% increase in the number of enquiries received 1,281 cases were accepted for investigation 970 investigations were completed. STANDARD CHARTERED 5K CITY RACE On Thursday 9 July a TPAS team of Tony Attubato, Charlotte Jackson, Lauren Ruston, David Berenbaum, Carlos Simoes, Martin Bell and Dawn Edwards ran in this year s City Race. And because of the Tube strike taking place on the same day the team had to walk the 4 miles to the start line, before running. Although the medal table wasn t troubled, an enjoyable evening was had by all. Page 2

3 SUMMER SEMINAR Nearly 50 volunteers attended our summer seminar on Thursday 2 July at the TPAS office. Presentations were made by An update on Pension Wise - Michelle Cracknell, Chief Executive, TPAS The Pension Changes Rosalind Connor, Taylor Wessing LLP 2016 State pension changes - Department for Work & Pensions Overpayments & the Limitation Act - Anna Rogers, Mayer Brown International LLP Challenging discretionary decisions, top 5 issues - Tiziana Scaramuzza, Faculty of Law, University of Oxford Copies of the slides can be viewed on the adviser section of the website. SAMARITAN TRAINING The Samaritans ran training on handling difficult customers on 16 and 22 September in the TPAS office. The training will be repeated in If you would like to attend contact Cathy at cathy.prenderville@pensionsadvisoryservi ce.org.uk PENSION WISE On 16 September the Economic Secretary to the Treasury, Harriett Baldwin MP announced that responsibility for delivery of the service will move from the Treasury to the Department for Work and Pensions by the end of the financial year. It has also been confirmed that we will be re-engaged to deliver the telephony service for next year. Page 3

4 TECHNICAL UPDATE Summer Budget 2015 On 8 July, the Chancellor announced a range of changes to the tax limits on pension provision, but also a consultation paper on ending tax relief on pension contributions altogether and remodelling pension schemes as ISAs. Lifetime allowance From 6 April 2016, the Lifetime Allowance (LTA) for pension contributions will drop again, from 1.25m to 1m. There will be transitional protection for pension rights already built up over 1m to coincide with this reduction. However, from 6 April 2018, the LTA will be indexed, rising each year in line with the annual increase in CPI. Annual allowance Complex changes are being made from 6 April The Annual Allowance will reduce for people with incomes over 150,000 (including the value of pension contributions) from the current allowance of 40,000 to 10,000 a year. But the reduction will only apply to people whose income without including the value of pension contributions is more than 110,000. The reduction to 10,000 will be tapered depending on income level: for every 2 of income over 150,000, 1 of annual allowance will be taken away. Pension Input Periods (PIP) will be aligned with the tax year and any PIP open on the day of the budget (8 July) closed on that date and a new PIP ending 5 April 2016 opened. Lump sum death benefits From 6 April 2016, lump-sum death benefits payable from a registered pension scheme or non-uk scheme on the death of a member over age 75 will be taxed at the marginal rate of the recipient. But where the taxable lump sum death benefit is paid to someone other than this, such as a trust or company, the charge will continue to be at the rate of 45%. Selling annuities in payment The proposal to set up a secondary annuity market has been delayed until 2017 following consultation in June. Further details are expected in the autumn. Pensions as ISAs The July Budget also launched a consultation on whether to radically change the tax structure of pension schemes from the current Exempt Exempt Taxed model (whereby contributions and growth enjoy tax reliefs and shelters, but income is taxed) to the Taxed Exempt Exempt model applying to ISAs (whereby money paid in is from taxed income with no added tax relief, but growth is tax-free and income taken out in retirement would be tax-free too). The stated aim of the consultation is to explore whether this change would increase pension saving. Public Sector Pension Schemes new legislation to block transfers to QROPS In August, Teachers Pensions (TP) discovered that the legislation that intended to completely restrict transfers out of unfunded public sector pension schemes to schemes that allowed flexible access did not in fact appear to prevent certain overseas transfers. To fit this exception, the scheme receiving the transfer must: be on the revised QROPS list, updated by HMRC on 1 July 2015; have their main Page 4

5 administration in a state in the European Economic Area (EEA), other than the UK; and must not be an occupational pension scheme. TP have been writing to affected members, providing them with transfer discharge forms. However, HM Treasury have now issued further legislation (SI 2015/1614) which brings these transfers into line with all other restricted transfers, effective from 7 September. This means that in future the only transfers permitted from unfunded public sector scheme will be to other schemes providing safeguarded rights (broadly that means DB schemes). Transfers to schemes outside the EEA have not been allowed since 6 April Regulator publishes guidance on new DC governance standards In August the Pensions Regulator published guidance for trustees of DC workplace pension schemes on their new responsibilities post 6 April The new requirements are designed to improve governance and administration in workplace DC schemes and deliver good member outcomes. The new duties state a scheme must: meet new governance standards and explain how it has done so in an annual chair s statement; have an appointed chair who signs the annual statement; be compliant with the new charge controls, which relate to schemes used as automatic enrolment qualifying schemes ; informing members about the increased range of options they have at retirement. The Regulator has produced a series of documents and FAQs on this subject while it updates its DC Code of Practice. TPR aims to consult on the new code in the autumn, and publish the finalised code in spring Spotlight on the need to take financial advice when accessing benefits under the new pension freedoms A. Transferring/converting safeguarded benefits Safeguarded benefits are primarily benefits in DB schemes but may also be benefits such as guarantees or other promises in other types of scheme. The term is defined in the negative, and referred to as any benefits other than money purchase benefits or cash balance benefits. Members considering transferring safeguarded benefits with a value of more than 30,000 to a DC scheme in order to access their benefits flexibly will need to get independent financial advice from a regulated adviser about the proposed transfer. Before transferring a member s benefits, the scheme s trustees have to check that the member has obtained this advice. Page 5

6 A member wanting to transfer benefits valued at 30,000 or less will not have to get advice. Trustees must provide certain information to the member during the transfer process about the member s need to obtain appropriate independent financial advice. Trustees must also tell the member what information (s)he needs to give them to prove they ve obtained this advice, if it is needed. NB the requirements also apply when a member takes an internal transfer of safeguarded benefits to flexible benefits within the same scheme (or other ways of DB rights to DC). The member is expected to pay for the financial advice unless the transfer has been instigated by the employer (in which case it s the employer who has to pay). B. Transferring/converting DC benefits that include some form of guarantee As with DB benefits, if the value of the fund is 30,000 or less, the new rules do not require the member to take financial advice before taking steps to access their benefits flexibly. A receiving provider may require advice to be taken prior to accepting an application for a new product. This will down to the provider s own commercial practice and is not affected by the pension flexibility changes implemented on 6 April If the value of the fund is more than 30,000, the member may be required to take financial advice, depending on the nature of the guarantee. If the policy includes a GMP, such as with s32 plans or other policies designed to buy out contracted-out DB benefits, then we believe advice is required. If the policy contains a Guaranteed Annuity Rate (GAR), this will need to be valued separately to determine whether the fund value exceeds the 30,000 threshold, and therefore advice will be needed. However, advice doesn t appear to be compulsory for transfers where the plan includes a guaranteed growth rate or guaranteed capital sum, or other such investment guarantee. C. Transferring/converting DC benefits with no in-built guarantees These benefits are now termed flexible benefits. So, regardless of fund value, the current legislation does not require that the scheme trustee or manager ensure that the client has received financial advice prior to any conversion or transfer of these benefits going ahead. A receiving provider may require advice to be taken prior to accepting an application for a new product. This is within the provider s remit and is not affected by the pension flexibility changes implemented on 6 April. Page 6

7 Pensions Timeline A timeline of developments in pensions expected over the next six months: Month October Event Closure of HM Treasury consultation on early exit penalties, the transfer process and how greater clarity can be provided on the circumstances in which individuals should seek financial advice (not FCA, see May Update). End of DC short-service refunds as 30-day vesting comes into effect. Autumn TPR consults on new DC Code of Practice Formal response expected to Call for Evidence on the Secondary Annuities Market January Court of Appeal considers Horton v Henry (on availability of undrawn pension pots to creditors on bankruptcy) WHERE TO GET HELP Remember all our complaint guidance can be found in the adviser section of the website. The adviser section also gives you access to the Aries pension technical resource. Questions can also be sent to the dispute resolution team at advisers@pensionsadvisoryservice.org.uk VIEWS AND EXPERIENCES OF THE NEW PENSION FREEDOMS The government is seeking responses on early exit penalties, the transfer process and how to more clearly communicate when consumers should seek financial advice. The consultation closes on 21 October. For more details see: PENSION TRACING SERVICE A significant number of the cases we are asked to help with concern attempts by individuals to locate pension entitlements they accrued during their working careers or disputes on whether a particular pension provider is responsible for someone s entitlement. The majority of these enquiries will have already contacted the DWP s Pension Tracing Service before approaching TPAS. But if an enquirer has not yet Page 7

8 contacted the Pension Tracing Service, it is an obvious first port of call when investigating the matter. However, please note that a simple google search for the pension tracing service will result in links to a number of different commercial organisations. The correct link for the DWP s tracing service is: Please use our guidance Tracing a pension, which can be viewed in the adviser section of our website. RECRUITMENT We re delighted that so many of you have stepped forward to help people with their pension problems and questions. But demand for our service is very high. To help meet that demand we need more volunteers. If you have colleagues or friends who you think have what is necessary to help, please encourage them. Anyone interested in volunteering can volunteer@pensionsadvisoryservice.org.uk or call Cathy on PERFORMANCE HOW ARE WE DOING? Our targets are that: forms of authority are issued within two weeks of receipt of the case; a positive action on the case takes place within two weeks of receipt of the form of authority; and the complainant is updated on progress at least once every two months, Based on cases closed in the 1 st quarter of 2015/16 we achieved: YES NO Form of authority obtained within 2 weeks 96% 4% Positive action within 2 weeks of obtaining authority 96% 4% Complainant updated with progress at least once every two months 91% 9% Thank you for helping us achieve such good performance standards. Please make every effort to meet our standards. Page 8

9 CLIENT QUESTIONNAIRES At the end of the first quarter our satisfaction rate was: SATISFIED UNSATISFIED 83% 17% CASEWORK At 31 August we had 1,631 open cases. The age of the casework was broken down as follows: Less than 6 months old 1062 Between 6 and 12 months old 357 Between 12 and 18 months old 155 Over 18 months old 57 Please remember send cases to your regional organiser for review once they are completed. If you are unable to progress a complaint and feel that resolution is not going to be possible, please return the case papers to the TPAS office as soon as possible. Over the next few months we will be increasing the frequency we seek updates on how cases are progressing. We would be very grateful if you would respond to those requests quickly. Thank you. TPAS 5 a SIDE Following the recruitment of our colleagues providing the Pension Wise telephony service, we now have enough staff to have our own 5 a side challenge. The inaugural TPAS Cup was held on 3 September. And the 6 th floor (the Dispute Resolution Team and Corporate Services) ran away 8-3 winners. Page 9

10 The 6 th floor squad line up before kick-off. Page 10