PFS news update from 25 February 2015 - 10 March 2015 covering
taxation, investments, pensions and retirement planning.
Taxation and Trusts
Taxation and trusts
The official rate of interest for 2015/16
(AF1, AF2, RO3, JO3)
HMRC has announced that 'The official rate of interest' that
applies to employment-related loans will be 3% for 2015/16. However
this is still subject to the necessary Treasury regulations coming
The rate for the current tax year is 3.25%.
If an employer makes a cheap loan to a higher paid employee (one
earning £8,500 a year or more) or a director then the official rate
is used to measure the benefit to the employee which is subject to
tax as a benefit in kind. The benefit is the difference between the
interest (if any) paid by the employee and interest at the official
rate. An employer will pay Class 1A National Insurance
contributions on any taxable benefit.
There is a de minimis provision which operates so that if the
loan (or total loans) for an individual at no time in the tax year
exceeds £5,000 no tax charge is made.
The official rate of interest also applies in calculating the
pre-owned assets tax charge on assets other than land. The de
minimis provision of £5,000 also applies in this situation and is
based on the chargeable amount for the year. So if someone is
chargeable throughout the whole tax year and the annual benefit is
calculated at no more than £5,000 no tax charge is made and they do
not have to declare the benefit on their income tax return.
The transfer of ISA benefits to a surviving spouse or
civil partner upon death
(AF1, AF4, RO2, RO3, CF2)
In this article we examine the impact of draft regulations to
implement the ability to transfer ISA benefits to a surviving
spouse/civil partner. What follows is based on draft regulations
which could, of course, change before final implementation.
In the Autumn Statement, which was delivered on 3 December 2014,
it was announced that the ISA rules would be amended to provide for
the spouse or civil partner of a deceased ISA saver to receive an
additional ISA allowance up to the value of the deceased saver's
ISA at the time of their death. In addition, the additional ISA
allowance would not count against the surviving spouse's/civil
partner's annual ISA allowance.
The proposed changes will have effect from 6 April 2015 in
respect of deaths which occur on or after 3 December 2014. These
changes do not apply to the JISA.
In this bulletin we refer to the additional allowance as the
"additional allowance subscription".
Who is eligible to make an additional allowance
(i) The surviving spouse/civil partner of an ISA saver who died
on or after 3 December 2014. At the time of death the deceased ISA
saver and the surviving spouse/civil partner must have been living
together as defined in section 1101 of the Income Tax Act 2007.
(ii) The additional allowance subscription must be made to an
ISA, re-wrapped in the name of the surviving spouse/civil partner.
The re-wrapped ISA must be managed by the account manager who
managed the deceased's account. However, the regulations (at
5DDA(7)) provide that HMRC can authorise another account manager to
accept a subscription from the surviving spouse/civil partner. The
relevant part of the tax information and impact note (TIIN) reads
'In most cases, it is anticipated that the additional allowance
should be used to subscribe to an ISA offered by the same financial
institution that provided the deceased saver's ISA. An eligible
individual may use this additional allowance by subscribing to an
ISA they already hold, or by opening a new ISA.'
We understand that HMRC has stated that regulation 5DDA (7)
'…provides for cases where a provider is unable to accept an
additional permitted subscription, for instance because their book
of business is closed. Where the manager is unable to accept a
subscription they would need to refer to HMRC." The TIIN, to which
HMRC has been referred, is thus perhaps not telling the whole
These regulations are in draft and it is to be hoped that the
final version incorporates a little more flexibility on this
The subscription limit
The amount of the additional allowance subscription(s) cannot
exceed the total value of all of the ISAs owned by the deceased at
the date of their death.
The subscription rules
An additional allowance subscription can be made in cash or in
specie (called non-cash assets).
(a) Cash subscription
In this situation, on death the ISA will come to an end (as it
does currently) by the deceased's personal representatives taking
the cash from a cash ISA, or arranging for the assets in a stocks
and shares ISA to be liquidated or assigned to a beneficiary of the
Once this occurs the surviving spouse can make an additional
subscription up to an amount not exceeding the value of the
deceased's ISA(s) at the date of death. The surviving spouse can
make this additional subscription irrespective of who inherits the
proceeds of the ISA. For example, the whole of the deceased's
estate could pass to a charity but because the deceased's ISA has
terminated their spouse can make an additional allowance
subscription within the permitted time limits - see below. A
subscription may also be made when there is an in specie
subscription (see b) below) and the value of the non-cash assets at
subscription is less than their value at death.
(b) In specie subscription
For an ordinary subscription to an ISA to count it must be in
cash subject to one exception for shares awarded under certain
share option schemes. In contrast, an additional allowance
subscription can be in cash or in specie (called "non-cash
Where the amount subscribed is made up of non-cash assets then
the following conditions apply:
(i) The non-cash assets subscribed were in an ISA held by the
deceased at death;
(ii) The non-cash assets subscribed were inherited by the
surviving spouse/civil partner from the deceased; and
(iii) The non-cash assets at the point of subscription remain in
the ownership of the account manager ie the non-cash assets have
remained in the deceased's ISA and have not been transferred out to
the surviving spouse/civil partner.
The non-cash assets that can fund an additional allowance
subscription are those investments that qualify for inclusion in a
stocks and shares component apart from cash; and the following
assets which qualify for inclusion in a cash component
a) Certain securities issued under the National Loans Act
b) A depositary interest
c) A short-term money market fund as defined
d) A money market fund as defined
When a non-cash asset subscription is made the amount of
the subscription is equal to the value of the asset at the date of
subscription. Because of this rule, the net result is that
an in specie transfer will never be a simple movement of holdings
from old to new ISA, unless the value at the date of death is
matched by the value at the date of the survivor's
- If values rise after death, then some of the former ISA
holdings effectively become non-transferable (in ISA terms);
- If values fall between death and subscription it will be
possible for the survivor to make a full in specie transfer and a
top-up cash subscription.
Just to complicate matters further, HMRC has confirmed that
there is no change in the tax treatment of ISAs following death.
Thus post-death income and gains will be taxable on the estate,
even though for an in specie transfer it is a requirement of the
regulations that "immediately before that [survivor's]
subscription, title to those assets is vested, and has continuously
since the deceased's death been vested, in the account manager or
his nominee or jointly in one of them and another."
Income arising from the deceased's ISA, eg dividends, will not
be transferable, although it may be possible to use it to fund a
top up subscription if investment values fall post-death.
The "permitted" period
A subscription funded by non-cash assets must be made within a
period which runs for 180 days from the date those non-cash assets
were distributed to the surviving spouse/civil partner by the
deceased's personal representatives.
Any other subscription - which basically means cash - must be
made within 3 years from the deceased's date of death or within the
180 day period following completion of the administration of the
deceased's estate if this date is later.
In connection with "any other subscription", if the deceased
died on or after 3 December 2014 but before 6 April 2015 they will
be treated as dying on 6 April 2015 for the purposes of the "3 year
Making an additional subscription
An individual who wishes to make an additional subscription will
be required to provide certain information and give certain
declarations to the provider as follows:-
- the deceased's full name;
- the deceased's full permanent address at the date of
- the deceased's NINO, or confirmation they did not have
- the deceased's date of birth and death; and
- evidence that the individual making the additional subscription
was the spouse or civil partner of the deceased.
An additional allowance subscription will not count as an
additional subscription which counts against the surviving
spouse's/civil partner's provided satisfactory declaration are
given by the surviving spouse/civil partner as follows:-
- he or she is the surviving spouse/civil partner of the deceased
and that the couple were living together at the time of the
- the subscription is an additional permitted subscription;
- the subscription is being made within the permitted time limits
Government launches campaign promoting will-making and
powers of attorney
The Ministry of Justice has recently launched a public awareness
campaign to encourage people to plan for their and their families'
futures by ensuring they have wills and lasting powers of attorney
(LPAs) in place.
The 'Choice not Chance' campaign consists of a campaign
page on the Government website with links to further
information on wills and LPAs; as well as a series of posters
featuring emotive images and straplines intended to encourage
people to think about, and talk about, what might happen in the
event of their death, or if they lose mental capacity and need
somebody to make decisions for them. The posters, one of which
hints at the possibility of sustaining a head/brain injury while
playing contact sports, are targeted at the 25-50 age group, who
are often less inclined to think about these issues as they do not
think they are relevant to them.
The 'Choice not Chance' campaign should encourage a greater
number of younger people to make a will, create a lasting power of
attorney and talk to their parents about doing the same. The
campaign is also a welcome reminder for advisers that LPAs are not
just for the elderly - accidents can strike at any time and the age
group at which the campaign is aimed often have young families
dependent on them, as well other responsibilities to consider, such
as mortgages, which would still need to be repaid in the event that
they became incapacitated.
Case confirms financial contribution not necessary for
(AF1, AF4, RO2, RO3, CF2)
In the recent Court of Appeal case of Graham-York v York, 2015
EWCA Civ 72, the claimant cohabitee was awarded a 25% beneficial
interest in a property solely owned by her partner on the basis of
her 'domestic contributions' even though her financial contribution
was insignificant. The facts of the case were as follows.
Miss Graham-York and her partner, Mr York, lived together
between 1976 and Mr York's death in 2009. The property in question
was purchased by Mr York with the benefit of a mortgage taken out
by Mr York. After Mr York's death, mortgage arrears developed and
the mortgage lender obtained an order for possession. This order
was challenged by Miss Graham-York who argued that she had a 50%
beneficial interest in the home which was held in her deceased
partner's sole name and which was worth over £1.2 million.
At trial, the County Court determined that Miss Graham-York did
have a beneficial interest in the property but that it was limited
to 25% of its value. Miss Graham-York appealed this decision to the
Court of Appeal arguing that she was entitled to 50% of the
What emerged from evidence was that throughout their relationship,
Mr York had assumed sole responsibility for the management of the
family and household expenditure and that the financial
contributions from Miss Graham-York were extremely
limited. Miss Graham-York argued that although her direct
financial contributions may not have amounted to much, it was only
fair for her to have an equal share of the property given the
length of her co-habitation with Mr York (33 years) and the
contribution that she had made by bringing up their daughter.
Observing that the focus must be on valuing the actual
contributions, both financial and non-financial, without being 'led
astray' by the length of the co-habitation, the Court determined
that Miss Graham-York's contribution boiled down to two key
elements: the fact that she had played a primary role in looking
after their daughter, and the fact that she cooked the family
The Court ruled that these two elements justified a valuation of
her interest in the property at 25%.
The Court's ruling has been criticised by some as being overly
generous given that this was a case where the cohabitee's financial
contributions were virtually non-existent. However, this case
demonstrates that the Court will look closely at the extent of an
individual's non-financial contributions in such situations.
Non-resident trusts - HMRC guidance
(AF1, RO3, JO2)
HMRC has added a new chapter on non-resident trusts to its
Trusts, Settlements and Estates Manual (TSEM).The new section gives
guidance on whether a trust is non-resident, and what to do when a
non-resident trust is first set up. It also explains the tax
consequences for trustees, settlors and beneficiaries. The new
section can be found here.
There is also more detail than the previous guidance on trusts
with a foreign connection, see here. compared with the old guidance which has
now been archived.
Advisers may wish to consider reviewing the new section and the
changes to the sections in relation to 'Trusts with a foreign
connection' to ensure any of the details they rely upon when
advising in this area haven't altered.
Barclays Capital Equity Gilt Study 2015
(AF4, RO2, CF2)
The 60th edition of the Equity Gilt Study from Barclays Capital
was published at the end of last month, coincidentally in the same
week as the FTSE 100 at last overtook its 1999 peak. The study,
which incorporates UK investment data going back to 1899 and US
data from 1925, is used extensively by investment analysts,
financial journalists and fund marketing departments to provide
statistics about long-term equity investment.
A summary table of real (ie net of inflation) annual gross
returns to the end of 2014 is shown below:
UK Index-linked Gilts
Barclays Capital does not include commercial property in its
survey, but the corresponding figures based on the latest available
Investment Property Databank (IPD) statistics would be 1 year: 15.9%, 5 years;
7.2%; 10 years: 3.1% and 20 years: 5.7%.
Like its predecessors, the 2015 study contains a range of essays
examining topical investment issues. This year's set includes:
- Population dynamics and the (soon-to-be-disappearing)
global 'savings glut' Barclays argues that the world is
"on the cusp of a demographic inflection point." It thinks an
ageing global population means that, with a few exceptions such as
India and Brazil, saving has peaked and the pressure to realise
accumulated investments will grow. This is "likely to generate a
strong secular headwind for asset prices in the coming
- Adjusting to a world of lower oil Barclays'
research and modelling lead it to believe "that lower oil prices
are likely to persist." Demand growth will be slowed by energy
efficiency and weaker global growth. On the supply side, Barclays
says that US tight oil (aka shale/fracking) will keep OPEC in
- Emerging markets is still an attractive asset
class Despite recent difficulties, Barclays thinks that
emerging markets (EM) economies are in a better condition now than
a decade ago. Looking at EM in the context of a global portfolio,
Barclays consider the gap between equity risk premia for emerging
and developed markets "is significant", prompting it to suggest
that "allocations to EM assets make sense even if asset returns are
likely to be much lower than in the boom years."
- The decline in financial market liquidity
Barclays echoes the comments of several others on the subject of
market liquidity. It notes that while tighter regulations have
improved the financial system's stability, it has also reduced the
supply of safe, short-term, liquid assets and created a drop in the
liquidity of the fixed income markets. In turn this has driven
investors "to look to non-traditional sources of liquidity, such as
ETFs and mutual funds." While these fundsappearliquid, Barclays -
like many others - is concerned that liquidity in the underlying
investments of these funds could deteriorate, "exposing
end-investors to run risk."
The stand out line from the latest data is that for the 20 year
period from the end of 1994 to the end of 2014, gilts outperformed
UK equities by 0.5% a year in real terms. The corresponding figure
for last year had equities 2.0% a year ahead. The turnaround is
largely due to the consequences of the 1994 performance dropping
out (gilts underperformed equities by 12.2%) of the calculation and
being replaced by 2014 performance (gilts outperformed equities by
16.8%). However, regardless of the mathematical quirk, a 5.1% real
return from gilts over two decades does underline the extent of the
bull market in government debt.
Net receipt from an UFPLS
(AF3, RO4, CF4, JO5, FA2)
This considers the practical implications of how PAYE operates
on the payment of an uncrystallised funds pension lump sum (UFPLS)
and how that will impact upon the actual amount an individual
initially receives, compared with the final amount owing to (or by)
The HMRC Newsletter 67 looks at the instances where the scheme
has to operate a PAYE tax code on a month 1 basis. It is the manner
in which the "month 1" code collects income tax that will result in
a potential over payment of income tax, which the individual will
then need to reclaim from HMRC.
We will consider a couple of examples to demonstrate the
potential problems. It is important to note that we have shown
these calculations to two decimal places. The actual PAYE tax
tables will actually be rounded so the actual results with differ
slightly, but these example will convey the potential issues:
Andrew aged 59, is made redundant at the end of October 2015
(i.e. in the 2015/16 tax year) and supplies his personal pension
plan (PPP) provider his P45, which shows a tax code of 1080L (the
normal personal allowance of £10,600 plus £200 of professional
subscriptions) with gross income to date (7 months) of £21,000 and
PAYE deducted of £2,940.
In February 2016, he is finding it difficult to obtain new
employment and decides to take a £20,000 gross UFPLS from his PPP
which is paid in February 2016.
As per Scenario 1 of Newsletter 67 the PPP administrator will
operate the tax code 1080L on a month 1 basis the PAYE deducted on
the UFPLS will suffer PAYE of £5,190.25 leaving a net amount of
£14,809.40. The income tax liability is broken down as follows:
Subject to PAYE
Tax-free pay (1/12th of the PA)
Taxed at 20% (1/12th of the 20% band; £2,648.75)
Taxed at 40% (1/12th of the 40% band; £9,851)
Taxed at 45% (on the excess)
Total tax deducted
However, we need to consider the position at the end of the
- The PAYE deducted on his salary will have amounted to
£2,940.00, plus the £5,190.25 deducted from the UFPLS, a total of
- Andrew's total taxable earned income amounts to £36,000. Of
this he has to pay 20% income tax on £25,200 amounting to
The total tax deducted
Total tax due
Brian aged 61, is working part-time on a salary of £12,000 p.a.
In addition he has £3,000 of savings interest, however he pays no
income tax on this as it is covered by the 0% £5,000 starting rate.
In October 2015, he decides to draw a £12,000 gross UFPLS to allow
him to buy a new car.
As per Scenario 2 of Newsletter 66 the PPP administrator will
operate the emergency tax code 1060L on a month 1 basis, the PAYE
deducted on the UFPLS will suffer PAYE of £2,716.92 leaving a net
amount of £9,283.08. The income tax liability is broken down as
Subject to PAYE
Tax-free pay (1/12th of the PA)
Taxed at 20% (1/12th of the 20% band; £2,648)
Taxed at 40% (1/12th of the 40% band; £9,851)
Total tax deducted
However, we need to consider the position at the end of the
- The PAYE deducted on his salary will have amounted to £280,
plus the £2,716.92 deducted from the UFPLS, a total of
- Brian's total taxable earned income amounts to £21,000. Of this
he has to pay 20% income tax on £10,400 amounting to £2,080.
- However, his £3,000 of savings interest will no longer sit
within the starting rate band, as that has been filled by earnings
and pension income. As a result he will have a further liability of
£600 on the interest, bringing his total tax bill to £2,680.
The total tax deducted
Total tax due
Thus the £9,000 of taxable income from the UFPLS had added
£2,400 (£2,680 - £280) to Brian's tax bill, an effective rate of
26.67%, even though he remains a basic rate taxpayer.
As can be seen from both HMRC Newsletter, where the UFPLS
doesn't extinguish all the funds in the pension, HMRC will issue
the scheme administrator the appropriate tax code to operate
against future payment made in that tax year.
It would seem to make sense, if the client is happy to do so, to
take three or four small UFPLS payments rather than one larger one.
If the second and subsequent payments are delayed until after HMRC
issue the appropriate coding notice, it may mean there is a small
over payment of income tax, which will help the client's cash-flow.
However, it may well be the provider charges would mean this is not
a viable course of action.
As can be seen from the above two examples, when a client takes
an UFPLS it is likely to result in there being an over payment of
income tax as even relatively small lump sums will push a client
into the 40% or even 45% tax rate.
Clearly, HMRC would rather end up owing individuals income tax
back at the end of the year, rather than having to wait for the
individual to complete a self-assessment tax return to pay the
outstanding liability, especially as many of these individuals will
never have had to fill in a tax form before.
Another point worth mentioning is that, it is not correct to say
the UFPLS will be taxed at the individual's marginal rates of tax.
As it is deemed to be earned income it is the first tranche of
income tax, so for some clients the pension income will be taxed at
basic rates and their investment income is taxed at higher rate
Repatriating a QROPS to the UK
(AF3, RO4, CF4, JO5, FA2)
This considers the high level considerations where, in the past,
an individual had transferred their benefits in a UK Registered
Pension Scheme into a QROPS. Now that they are UK resident, whether
because they have returned to the UK, or they never actually left
in the first palace, they are wondering is it better to take
benefits under the QROPS or to transfer the benefits in the QROPS
back into a UK Registered Pension Scheme prior to commencing
receipt of the benefits.
There are a number of important considerations that need to be
factored in to the advice process. These are listed below. However,
as this is a complex area it is difficult to be very specific. The
following are some of the factors that need to be taken into
account and an adviser will need to ensure they fully understand
how they impact upon the circumstances of a particular individual
- There will be no hard and fast rules over the way in which
benefits can be paid from a QROPS; much will depend upon the
jurisdiction in which it is based. However, having said that, many
schemes will pay benefits broadly similar to those available under
a UK Registered Pension Scheme. So, for instance, we are aware that
some QROPS prior to 6 April 2015 were offering Flexible Drawdown
and so we see no reason why they would there be willing to offer
flexi-access drawdown from 6 April 2015.
- Changes made under the Taxations of Pension Act 2014 introduce
the pension flexibility rules. This may apply equally to non UK
schemes as well as to UK registered pension schemes. This means
that it is possible for the non-UK pension scheme to provide
benefits that will be taxed to a UK resident in a similar manner to
a UK registered pension scheme. The foreign pension income will
benefit from the 10% foreign income deduction, meaning that only
90% of the income will be taxable, although there may be some
withholding tax in the jurisdiction in which it is based.
- An argument has been put forward by some, that the 25% lump sum
paid from a non-UK pension scheme is liable to income tax. This is
because whilst in Part 9 Chapter 15A ITEPA 2003, "Lump Sums Under
Registered Pension Schemes" there is a specific exemption to income
tax in respect of a PCLS paid from a UK Registered Pension Scheme,
there is no equivalent in respect of non-UK pension schemes.
However, others argue that the wording of Part 9 Chapter 4 "Foreign
Pensions: General Rules" means that income tax is only levied on
pension income arising from a non-UK pension, and therefore it
follows the lump sum are not subject to UK income tax. There is
also an argument, based on the Danner case, that if the QROPS is
based in an EU Member State it will be difficult for HMRC to apply
income tax on a benefit that that is tax-free in the other EU State
and would also be tax-free if it were help in a UK registered
- When transferring a QROPS to another pension scheme, a FCA
regulated adviser would also, depending on the client's needs and
circumstances, need to consider transferring to a different QROPS
and not just a UK Registered Pension Scheme. It may well be that
the client's current QROPS doesn't offer the flexibility that is
desired. However, that flexibility might be delivered from a QROPS
based in another jurisdiction and not just a UK registered pension
scheme. We would therefore expect the resulting transfer report to
be considerably more complex than for a simple transfer between two
- An examination should be undertaken as to the reasons for
transferring to the QROPS in the first place. It may well be that
the original advice relating to the transfer to the QROPS was not
appropriate. If that is the case, this should be addressed before
any further action is taken.
- An adviser will also need to ensure that the advice area in
which they are dealing is one that they are suitably qualified in,
whether this is down to their PI insurers or their own internal
- QROPS based in the Channel Islands, Gibraltar or the Isle of
Man are in jurisdictions which use Sterling as their currency, are
part of the UK banks clearing system, and are either in the EU
(Gibraltar) or outside of the EU (Channel Islands and the Isle of
Man). A decision will need to be taken as to whether a QROPS based
inside or outside of the EU is in the best interests of the
- Where an individual transferred a UK registered pension scheme
to a QROPS, it will have been assessed against the individual's LTA
under BCE 8. If the individual decides to transfer back to the UK,
it is possible that he will qualify for the international
enhancement. Whether or not this is the case will depend upon the
specific circumstances of the individual. Please refer to
RPSM13100040 et al for more details of this. It would not be a good
outcome if, following a transfer back into the UK, the individual
was unable to replace the element of the LTA that was utilised on
the original BCE 8.
- If the QROPS contains the original transfer value plus growth,
then the excess over the monetary value transferred out is not part
of the funds on which the QROPS has to report to HMRC. So, if the
QROPS is transferred back, there is an argument to retain the
excess over the transfer value outside of the UK.
- If funds are repatriated, and then crystallised, remember there
is the potential, depending upon how benefits are crystallised, for
another test against the LTA on death or on attaining age 75. This
would not be the case if the funds remained in a QROPS.
RPSM13104020 confirms that the benefit payment from the QROPS (out
of the transferred funds) is not a benefit crystallisation event
for the purpose of the lifetime allowance.
- Broadly speaking the IHT position is similar for all qualifying
non-UK pension schemes (QNUPS) (see The Inheritance (Qualifying
Non-UK Pension Schemes) Regulations SI 2010/51) as for a UK
registered pension scheme. In particular for lump sum death
benefits to be free of IHT, they must be paid out of the QROPS
within 2 years of the date of the member's death or 2 years of the
date the scheme administration could reasonably have known of the
death. All QROPS will be QNUPS, but not all QNUPS will be
Many advisers are still recommending a client transfers to a
QROPS as a means of mitigating the reduction in the LTA. For some
people that will be appropriate advice, equally it will be
appropriate for some individuals to consider repatriating pension
to the UK. Remember the tax rules, and in particular pensions, seem
to be the target for politicians or all persuasions and so just
because the UK is an attractive case for pension funds now, doesn't
mean that will always be the case.
Whether an adviser is recommending a transfer out or, or into,
the UK it is important that the adviser fully understands all of
the implications, based both upon the UK rules, the rules in the
QROPS jurisdiction and the interaction between the two.
Pensions Schemes Act 2015
(AF3, RO4, CF4, JO5, FA2)
After its first reading in the Commons on 26 June 2014, the
Pensions Scheme Bill 2014-15 received Royal Assent on 4 March to
become the Pensions Schemes Act 2015.
According to the Minister for Pensions Steve Webb said:
- The passing of this act marks the culmination of a 5-year
pensions' revolution under this coalition government.
- While for years successive governments simply watched the slow
decline of the final salary scheme, we have responded by giving
firms new ways of providing their staff with secure pensions.
- There is a real appetite from employers to offer high-quality
pensions for their staff and the new Defined Ambition pensions made
possible by this act will enable a new generation of better, fairer
- The act also protects the new pension freedoms and
flexibilities, so people have control of their pension pots, and
know it is a criminal offence for scammers to pretend to offer
official Pension Wise guidance.
The landmark legislation passed today will create the
opportunity for workers to save into Defined Ambition and
Collective Benefit schemes:
- The former of these will offer them a promise about some of the
benefits they will receive, whilst the latter
- Will be able to pool risks between the members and this can
provide greater stability and already operate successfully in other
It is yet to be seen the appetite amongst employers and to a
lesser extend employees attracted by the pensions freedoms, will
have for these new types of pension structure.
The new Act also provides further protection measures for
pension savers taking advantage of new flexibilities to access
their pension pots from this April, including important new
legislation on the new guidance service, Pension Wise.