UPDATE JUNE This year s summer seminar will take place on 30 June The seminar starts at The programme is as follows:

Transcription

1 UPDATE JUNE 2016 SUMMER SEMINAR This year s summer seminar will take place on 30 June The seminar starts at The programme is as follows: OPENING ADDRESS - Baroness Rosalind Altmann CBE, Minister of State for Pensions (subject to availability) CHAIRMAN S ADDRESS - Museji Takolia, Chairman, TPAS CESSATION OF CONTRACTING OUT FOR DB SCHEMES Helen Forrest Hall, Pensions and Lifetime Savings Association TRANSFERS: SCAMS, QROPS AND MORE - Taylor Wessing LLP IMPACT OF PENSION REFORMS - Chris Curry, Pensions Policy Institute DATA PROTECTION -Taylor Wessing LLP To apply to attend, Paul on paul.day@pensionsadvisoryservice.org.uk WOMEN & PENSIONS Our latest 'Women and Pensions Survey', received over 1,500 responses. The survey focused on confidence and empowerment of pension savers, specifically asking questions to determine how confident people feel about making financial decisions for retirement. The analysis of this data uncovered three barriers that affected consumer behaviour: confidence, confusion and trust. To read the full report visit: Page 1

2 VOLUNTEER SURVEY Thank you to everyone who completed our survey. The results gave us some useful information on how we should tailor future recruitment messages as well as designing and providing support to you all. A summary of the results and actions as a result has been sent with this newsletter. GMP RECONCILIATION We were delighted that TPAS volunteer Pauline Armitage was able to spend some time with us on 5 May to share with us her knowledge and thoughts on the GMP reconciliation process. A video of the session and notes about GMP reconciliation can be viewed in the adviser section of the website (under Training and seminar notes ). Please note the videos are for TPAS advisers only and are not to be shared. PENSIONS OMBUDSMAN A round-up of determinations made in the first part of this year can be viewed in the adviser section of the website. NB. The Ombudsman s office now does not name complainants in published determinations and has started to publish opinions issued by its adjudicators as well as formal Ombudsman determinations. Opinions will be published if they are appealed to the Ombudsman or Deputy Ombudsman or are considered to be of interest. The Ombudsman s office has produced two new videos, How we can help and What you need to do. To view the videos: LEGAL PANEL Our legal panel is made up of ten experienced pension lawyers who give free legal opinions on selected cases. Their opinions can help resolve cases, especially if there is a disagreement of opinion on a point of law. For example, we recently handled a dispute with a public sector pension scheme administrator. The dispute was about the interpretation of the scheme s retirement regulations. The administrator insisted the regulations required that members made redundant after age 55 were paid an immediate early retirement pension. But the member claimed Page 2

3 he also had a right to transfer. We asked the legal panel for an opinion. They concluded the scheme administrator was correct. The member, although disappointed, was happy to accept the opinion and the matter was closed. If you are dealing with a case which you feel would benefit from a legal opinion, please contact David Shufflebottom on or david.shufflebottom@pensionsadvisoryservice.org.uk INFORMATION SECURITY POLICY The results from the recent survey suggested that our information security briefing note was not known by everyone. The current version has therefore been again attached to this newsletter. It can also be viewed in the adviser section of the website. Please take a moment to read it and be familiar with its contents. TECHNICAL UPDATE April 2016 Budget Changes Here is a round-up of the changes that affect the tax treatment of pension contributions and payments with effect from 6 April: The Lifetime Allowance reduces from 1.25m to 1m. This coincides with the introduction of two forms of transitional protection, Fixed Protection 2016 and Individual Protection Initially these protections are only available through writing in using a pro-forma letter to HMRC but an online process will be available from July. See our Spotlight on the Lifetime Allowance on our website for more on this. Changes to taxation of pensions on death of member. On death at 75 or over, the rate changes from a flat 45% to the recipient s marginal tax rate. On deaths before age 75 there is no tax charge on payments. Dependant s pensions can now exceed the member s pension and not be an unauthorised payment. Unused drawdown funds should be protected from a tax charge by changes to the inheritance tax rules. Contracting-out for Defined Benefit Schemes ends. Members and employers will as a result lose the NI rebates. Employers have been given a mechanism to reduce scheme benefits to offset their higher NI cost. Page 3

4 DC pensions already in payment can be paid as a trivial commutation lump sum. Where total pension savings would be under 30,000, trivial commutation of a DC scheme pension is now permitted. The lump sum is taxable at the member s marginal rate of tax. A tapered Annual Allowance for those with adjusted income over 150,000 p.a. The standard annual allowance for 2016/17 tax year is 40,000. But anyone with income over 110,000 p.a. may have their annual allowance reduced if their adjusted income, which includes the value of their employer s pension contributions, exceeds 150,000 p.a. The allowance is reduced by 1 for every 2 of earnings over the threshold, but will not be reduced below 10,000, even if income exceeds 210,000 p.a. Pension input Periods align with the tax year. This change coincides with the introduction of the tapered annual allowance, and follows on from the split PIPs in the 2015/16 tax year (see our Spotlight on End of Year Tax Planning for more details). Changes to allowable charges and commission payments. it will not be possible to pass on commission payments for financial advisers to employees for a pension scheme which has been set up for auto-enrolment or to be considered as suitable for auto-enrolment. This ban does not currently apply to existing commission arrangements, although future legislation is expected to come into force later in 2016 banning this as well. workplace defined contribution schemes used for auto-enrolment will be prohibited from levying differential charges for different categories of members (such as active member discounts). Pension Scams The Financial Conduct Authority has issued a number of warnings about firms it believes are providing financial services without authorisation; RBS Bourse, Capital Trust Ventures, Andersen Consulting (UK) and Beckett & Cromwell. The FCA says that these firms are not authorised by them but have been targeting people in the UK. The FCA maintains a list of unauthorised firms that consumers should avoid, here: The Pensions Regulator has also made a new campaign to protect pension savers. See here for more details: Page 4

5 We are involved in the cross-government task force Project Bloom which also involves the Serious Fraud Office, HMRC, the Pensions Regulator, the Financial Conduct Authority ( FCA ) and the Serious Organised Crime Agency which was established to combat pension liberation fraud. The task force has been called Project Bloom. TPR s recent campaign is based on real calls received on our helpline. If you think you could help, please let us know. Selling annuities in payment HMT and FCA are currently consulting on a number of areas they want to legislate on to create a reliable market, including: creating new regulated activities related to buying back annuities; setting rules on risk warnings, advice and recovery of costs; how the public can use the proceeds of a sale, for example recycling into flexible pension products, and how they will be taxed. The scope of the Pension Wise service has been extended to provide guidance in this area (under the Bank of England and Financial Services Act 2016). Abolition of DB Contracting-out protection for public sector scheme members HMT has committed to protecting GMPs from price-inflation for members of public sector schemes reaching state pension age between 6 April 2016 and 5 December 2018 inclusive. Pensions Timeline A timeline of developments in pensions expected over the next few months: Month June July Summer Event - various consultations on Secondary Annuity Market close - new DC Code of Practice and guidance expected from The Pensions Regulator - Finance Act 2016 to receive Royal Assent Page 5

6 COURT CASES UPDATE Security of benefits not a factor for an actuary when giving transfer without consent certificate In the case of Pollock v Reed, the High Court confirmed a scheme actuary need not take into account the security of benefits in a receiving scheme when giving a certificate on bulk transfer without consent. The Halcrow Pension Scheme (HPS) was a defined benefit scheme with over 3,000 members and a solvency deficit of 600 million in October The principal employer Halcrow Group Limited (HGL) was in financial difficulties and was only able to continue trading with support from its US parent company. In October 2014 a draft proposal to restructure the pension scheme was put forward in order to make its funding position more manageable and to ensure continued support from HGL s parent company. It proposed to transfer the assets and liabilities to a new scheme called HPS2. The benefits would be the same as HPS except for future increases to pensions in payment and deferment, which would be reduced to statutory levels. The transfer needed to be done without members consent due to commercial sensitivity and hence required an actuarial certificate under regulation 12(3) of the Occupational Pension Schemes (Preservation of Benefits) Regulations 1991 confirming that the transfer credits in HPS2 were broadly, no less favourable than the rights to be transferred. The trustees argued that when determining that transfer credits were broadly no less favourable the actuary should take into consideration the security of benefits and therefore the likelihood of benefits being paid. However, the employer s position was that the actuary may take into account a variety of factors which he considers relevant, including the security of benefits, but was under no obligation to do so. This was important as there was high likelihood that HGL would go into insolvency and HPS would enter the Pension Protection Fund if the transfer did not go ahead. The High Court held that there was no ground for the trustees construction of the regulation 12(3). The actuary s assessment did not include the security of benefits as a factor to be taken into account. The Court concluded that had it been intended that such a factor to be taken into account, the regulation would have said so. 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 Page 6

7 RECRUITMENT Please continue to encourage colleagues or friends who you think have what is necessary to help. Anyone interested in volunteering can or call Paul on We re also very keen to set up teams of volunteers, based within the same firms. For more information, speak to Rob Jones 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, In 2015/16 we achieved: YES NO Form of authority obtained within 2 weeks 95% 5% Positive action within 2 weeks of obtaining authority 96% 4% Complainant updated with progress at least once every two months 92% 8% Thank you for helping us achieve such good performance standards. Please make every effort to meet our standards. CLIENT QUESTIONNAIRES At the end of 15/16 our satisfaction rate was: SATISFIED UNSATISFIED 85% 15% CASEWORK At 31 May we had 1,466 open cases. The age of the casework was broken down as follows: Page 7

8 Less than 6 months old 864 Between 6 and 12 months old 406 Between 12 and 18 months old 145 Over 18 months old 51 Please remember to send cases to your regional organiser for review as soon as possible after completion. 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. It is very important that we have updates on how cases are progressing. We would be very grateful if you would respond to those requests quickly. Thank you. Page 8