Personal Finance Society news update from 18 November 2015 - 01
December 2015 on taxation, retirement planning, and
Taxation and Trusts
Taxation and trusts
Woman convicted for faking the witnessing of testator's
(AF1, RO3, JO2)
A 74-year-old Derbyshire woman, who persuaded two people to
'witness' the signature of her deceased cohabitant after his death
in order to allow her to prove his will, has been given a 12-month
jail sentence suspended for two years for using a false instrument
in order to deceive.
Ms Lovelock had lived with Norman Meakin for many years in a
home owned by him. Although Ms Lovelock owned her own home, Mr
Meakin had allegedly promised Ms Lovelock that she could remain in
occupation of his property for life.
Following his death in September last year, Mr Meakin's family
presented a will to Ms Lovelock which provided that the estate
should be divided between five relatives and Ms Lovelock in equal
shares. However, Ms Lovelock indicated she had recently discovered
another will which allowed her to remain living at the address
where she lived before his death, until her death.
Although the second document was accepted by the Court as one
that Mrs Meakin had genuinely signed, the evidence revealed that
the two witnesses, who had supplied signatures confirming they saw
Mr Meakin sign the will, had not written their names on the
document until after his death.
Summing up, Recorder Michael Stephens said "Where things have
gone wrong are: after he passed away you wrongly took it upon
yourself to get it signed so that the will could be seen as a valid
document and I believe you knew you were doing something wrong
there." "You got two vulnerable, naive people to sign that
document. I think you took advantage of their good nature."
This case highlights the importance of ensuring that the proper
formalities are observed when executing a will in England and Wales
- especially in cases where the intended beneficiary is not legally
married to the testator. Unless the will has been signed in the
presence of two witnesses (who have also signed the will in the
presence of the testator), it will not be valid - even if there is
evidence that the testator intended the document to be their last
The Finance Bill 2015-16 has received Royal Assent
(AF1, AF2, AF3, AF4, RO2, RO3, RO4, JO2, JO3, JO5, CF2, CF4, FA2,
FA4, FA5, FA7)
The Finance Bill 2015-16 received Royal Assent on 18 November
2015 and can be found here. It is called The Finance (No.2) Act
2015. The Finance Bill 2015-16 was also referred to as the
Summer Finance Bill 2015.
The Finance Bill Finance Bill 2015-16 - full
text of the Bill as published on 15 July 2015.
Summer Finance Bill 2015 - Explanatory notes and guidance published on 15
Summer Finance Bill 2015: Measures with immediate
effect - listing of measures already announced in July
October inflation numbers
(AF4, CF2, RO2, FA7)
Annual inflation on the CPI measure remained negative in
October, with the rate remaining at September's -0.1%. The October
inflation numbers from the Office for National Statistics
(ONS) were in line with market expectations, which means that the
CPI has been in a band between +0.1% and -0.1% for the last nine
The CPI showed prices rising by 0.1% over the month, the same as
between September and October 2014. The CPI/RPI gap narrowed by
another 0.1% this month, with the RPI falling by 0.1% to 0.7% on an
annual basis. Over the month, the RPI was flat, marginally
bettering the CPI.
The unchanged CPI annual rate was due to "a
number of offsetting upward and downward contributions", according
to the ONS:
Clothing and footwear: Overall prices rose by 2.0%
between September and October this year compared with a rise of
0.6% between the same two months a year ago. The ONS says that
clothing prices "provided the largest contribution to change in the
CPI 12-month rate in either direction" and the monthly increase was
the largest for September to October since official records started
in 1996. Last month saw clothing and footwear as a major downward
contributor, due to extended summer sales, so the latest figure
evens things up. The monthly gyrations obscure the fact that
year-on-year clothing and footwear inflation is 0.8%.
Recreation and culture:Overall prices rose by 0.8%
between September and October this year compared with a 0.4%
increase between the same two months a year ago. The upward
contribution came from price movements for a range of recreational
goods, most notably computer games and consoles.
Education: Overall prices rose by
3.6% between September and October this year compared with a rise
of 7.9% between the same two months in 2014. The downward
contribution came principally from UK and EU student tuition fees:
the impact from the rise in the cap for tuition fees (first
introduced for new students in England in 2012) was smaller this
year than in 2014. The was because only the fees for four year
courses rose to new higher rates in 2015 compared with fees for
three year courses rising a year ago, together with the fact that
there are fewer fourth year than third year students. The
distorting effect of the hike in tuition fees will now drop out of
the October inflation figures - at least until the next reform of
student funding. In any case, education is the smallest but one
component of the CPI, accounting for only 2.6% of the index.
Food and non-alcoholic beverages:
Overall prices fell by 0.4% between September and October this year
against a rise of 0.1% in the same period a year ago. The downward
contribution came from price movements for a wide range of
foodstuffs, partially offset by upward contributions from price
movements for some confectionary. The latest figures continue the
trend of negative food inflation seen over the last 18 months and
leave the annual pace of food price inflation at -2.7%.
Alcoholic beverages and tobacco:
Overall prices fell by 0.4% between September and October this year
compared with a rise of 0.6% between the same two months a year
ago. The downward contribution came from wine, spirits and tobacco.
This is the first time that prices have fallen in this sector
between September and October since 2009 and the largest fall
between the two months since official records began in 1996. A
Chancellor looking for money to fund tax credits may take note…
Core CPI inflation (CPI excluding energy, food, alcohol and
tobacco) was an annual 1.1%, up 0.1% from the previous month. Three
of the twelve components of the CPI index are now in negative
annual territory, one fewer (clothing and footwear) than last
month. Another way of looking at how underlying prices are going is
that the ONS statistics show annual inflation for goods is running
at -2.1%, while that for services is +2.2%.
The October inflation numbers help to justify the Bank of
England's dovish stance, revealed a fortnight ago. They may also
ease the Chancellor's options in coping with the £4bn hit to tax
credit reductions he must deal with in the Autumn Statement. As
suggested above, he could afford to push up some 'sin taxes'
without threatening inflation problems.
The costly triple lock
(AF3, RO4, CF4, JO5, FA2, RO8)
News reports at the weekend revealed that the basic state
pension will rise by 2.9% (£3.35 a week) from April 2016 to
£119.30. The rise is the result of the earnings element of the
triple lock biting for the first time. CPI inflation to September
2015 was -0.1% and the third element of the triple lock, the floor
of 2.5%, was beaten by resurgent earnings growth.
Why the news came out at the weekend, ahead of the Autumn
Statement, is interesting to ponder. One important factor may be
that an increase in the basic state pension sits uncomfortably with
a freeze for most other benefits (due to that negative CPI) and the
planned, but now to be reworked, reductions in tax credits. The
basic state pension is forecast to account for £68.4bn of government
expenditure in 2015/16, according to the DWP. Thus the 2.9%
increase will add about £2bn to next year's government spending
bill. That is close to half of the amount that was going to be
clawed back via tax credit cuts before the House of Lords
The increase in the basic state pension should mean (subject to
any Autumn Statement surprises) that the standard minimum guarantee
will also rise by £3.35 a week, to £154.55 for a single person. If
past precedent is followed, the follow on from that is the single
tier pension will start life next April at £154.60 a week, 5p a
week more than the guarantee. The additional and graduated state
pensions are CPI-linked and so will remain unchanged in April.
The 2.9% increase highlights what Paul Johnson,
director of the Institute of Fiscal Studies, recently described as "a bizarre degree of randomness
[in] the future level of state pensions which will depend not on
overall increases in prices or earnings but on the timing of those
rises". Linking increases to earnings alone - as was the case
before 1980 - is a more logical approach as it ought to mean growth
in the cost of state pensions is more closely related to growth of
the UK economy. Under the triple lock system, there is an effective
ratchet in economic downturns, as the last few years have made all
too clear. The OBR reckons that that the continuation of the triple
lock would add well over 1% of national income (say £20bn in
today's terms) to pension spending by the middle of this century,
relative to the cost of pure earnings indexation.
HMRC publishes countdown Bulletin No 11
(AF3, RO4, CF4, JO5, FA2, RO8)
HM Revenue & Customs (HMRC) has published the
11th issue of its "Countdown Bulletin to the end of
Contracting-out", which is an adhoc bulletin covering scheme
cessation and answers to queries raised at the pension conferences
earlier in 2015.
In this edition they cover:
1) Pension Forums
Pension forums are being offered around the country during
December 2015 to help schemes plan for the end of contracting out
and ongoing GMP service plans.Contact:
to register interest.
2) GMP Service testers
From April 2016 HMRC will no longer issue these statements or
data files for any member who leaves, transfers, dies or
claims/reaches SPA on or after 6 April 2016.
This means that schemes need to use the GMP Service to obtain a
More testers are required to make sure the new GMP service runs
Testers are required who currently:
- request GMP calculations
- deal with the statements/data files when a member retires or
when a transfer takes place
- receive data files and who upload them on to their systems
3) Reconciling active membership records
In December 2016 HMRC will automatically close the records of
approximately 6.2 million individuals who are still in
contracted-out employment on 5 April 2016. Details of these scheme
memberships will then be available to Pension Scheme administrators
to reconcile against their own records.
HMRC will work with Pension Scheme administrators until 31
December 2018 to complete this reconciliation. A short survey has
been created to obtain your views on the reconciliation process.
Survey closes 30th November 2015.
4) Customer Relations team mailbox
The customer relations team now has a designated email address.
The email address is:
5) Contact details
If the enquiry relates to their contracted out pension or
National Insurance contributions (NIC) the contact details are as
- Telephone: 0300 200 3507 (for contracted out enquiries)
- Telephone: 0300 200 3500 (NIC enquiries)
The address Mailbox.email@example.com is
for enquiries from Pension Scheme administrators and trustees
Latest news from The Pensions Regulator
(AF3, RO4, CF4, JO5, FA2, RO8)
The following is brief roundup of the most recent announcements
in the pensions arena from The Pensions Regulator (TPR).
1. Helping you meet new DC governance
Find out what trustees and administrators need to do to meet
requirements around DC governance standards in TPR's latest video.
The standards came into force in April 2015 and every year
trustees will have to describe in their chair's statement how their
scheme is meeting them, so it is important that trustees and
administrators know what the requirements.
2. New trustee landscape research
New research carried out by OMB Research on behalf
of TPR in respect of the trustee landscape reveals findings on the
skills and knowledge of pension scheme trustees and their boards in
the context of major industry reforms.
This research is part of ongoing work by TPR with the industry
to consider what more can be done to improve outcomes for savers
and clarify duties for those running or supporting schemes.
3. Independent assurance for another master
The National Employment Savings Trust (NEST) is the latest
occupational DC master trust to obtain independent assurance.
The voluntary assurance framework was developed by the Institute
of Chartered Accountants of England and Wales (ICAEW) in
association with the regulator to support auditors to provide
independent assurance reports for the trustees of master
In addition, NEST has been added to a list of master trust pension schemes open to
employers of all sizes, and which have been independently reviewed
to help to demonstrate that they are administered to a high
standard. This list currently includes the following the following
- National Employment Savings Trust (NEST)
- The People's Pension
- NOW: Pensions
4. New government consultation
The Department for Work and Pensions has launched a consultation
'Better Workplace Pensions: Banning member-borne commission in
occupational pension schemes'. The consultation runs until 27 November.
The government would welcome responses from, among others,
trustees and their advisers and those who provide services to
occupational pension schemes.
5. Workie says: 'Don't ignore the workplace
A new character was introduced last month with the launch of a
campaign which aims to change the country's perception of pensions
in the workplace.
'Workie' will be seen visiting people in all
sorts of work environments over the coming months, asking them not
to ignore him.
While automatic enrolment into workplace pensions has been
rolling out across the UK since 2012, it is only now that up to 1.8
million small and micro employers are being required to take action
to help their staff to save for later life
6. Latest automatic enrolment numbers
TPR's latest quarterly report on automatic enrolment provides
information about our cases and the powers we have used relating to
automatic enrolment and associated employer duties. This report
also includes lessons learned from some recent Tribunals.
Between July and September this year TPR issued:
- Unpaid contributions notices: 85
- Fixed penalty notices: 107
- Escalating penalty notices: 2
7. New interactive web journey launched for small and
To help reduce the challenge of automatic enrolment for small
employers, TPR recently launched a new interactive step-by-step online guide.
It's designed to meet the specific needs of these employers who
may not have pensions experience, including those with just one or
two members of staff.
The guide provides clear and accessible information for
employers on what to do, and by when, using videos, animations and