Pensions; FOS complaints data; Lifetime allowance frozen until April 2026 and more.

• Government to consult shortly on simple annual pension statement
• Lifetime allowance frozen until April 2026.
• TPR pledges to make workplace pensions work for savers in its revised 15-year strategy
• Consultation: TPR’s approach to the investigation and prosecution of the new criminal offences
• FOS: Complaints data
• PASA publishes guidance on getting ready for pensions dashboards

 

 

Government to consult shortly on simple annual pension statement

(AF3, FA2, JO5, RO4, RO8)

Minister for Pensions and Financial Inclusion Guy Opperman has said that the Government will consult shortly on mandating the use of simpler annual statements. Speaking at the PLSA Investment Conference, he also suggested that there could be a greater push for providers to engage in a “pension statement season”, a short period each year where “people are receiving the statements [to] reinforce the normalisation of pension saving”. He added: “We are building on the participation in automatic enrolment (AE) but we are also understanding that there is a growing likelihood that people will have a multitude of different jobs... and therefore multiple pension pots and multiple statements.” The full text of the speech was published by the DWP.

 

 

 

Lifetime allowance frozen until April 2026.

(AF3, FA2, JO5, RO4, RO8)

In the March 2021 Spring Budget the Chancellor confirmed that the Lifetime Allowance (LTA) will be frozen at £1,073,100 until April 2026.

The LTA was planned to increase by CPI each year as it has done since 2018/2019. The annual increases now won’t take place until at least April 2026.

The change has little immediate impact as due to low inflation the LTA was only expected to increase by around £5,800 in 2021/22 

A much bigger issue will be the removal of future increases. If the LTA had continued to be uplifted with inflation it would be around £1.22m by April 2026. It will now be around £150,000 less than this. This means pension savers would miss out on up to £37,500 of extra tax-free cash.

The good news is that all the other benefits or pensions remain. Personal contributions can benefit from income tax relief at the client’s highest marginal rates, employers can benefit from corporation tax relief, the funds grow free of tax on income and capital gains, 25% tax free cash is still available and most pension funds sit outside of the estate for inheritance tax purposes.

There are no changes to the annual allowances or tapered annual allowance income limits.

 

 

 

TPR Pledges To Make Workplace Pensions Work For Savers In Its Revised 15-Year Strategy

(AF3, FA2, JO5, RO4, RO8)

A blueprint for the future of pensions regulation has been heralded by The Pensions Regulator (TPR) with the publication of its latest “Strategy: Pensions of the future” in which it sets out its 15-year vision to protect savers.

TPR’s Corporate Strategy reflects a fundamental shift in pension saving in the UK but also focuses on the short-term challenge of protecting millions of savers as the country recovers from the COVID pandemic. TPR will immediately start to deliver on the strategy’s five priorities, including by stepping up the fight against scams with our partner agencies, a new climate change strategy to ensure schemes are investing in the best interests of members and by publishing a discussion paper to assess value for money for savers.

Reflecting the changing nature of workplace pensions, the strategy sets out how TPR will carefully balance its focus between DB and DC, with a focus on acting where it can make the most difference - and to the benefit of all savers. It also builds on TPR’s transformation to be a clear, quick and tough regulator.

The final version follows a series of round-table discussions with industry last year in which more than 40 key stakeholders took part, together with a consultation which led to several responses. TPR’s response to the discussion has also been published today. A number of changes have been made as a result, including:

• A firmer recognition of savers’ keen interest in investment decisions consistent with their values, ESG and climate change, which will drive a greater demand for stewardship.
• A greater emphasis on protecting and enhancing outcomes for all kinds of savers, in addition to clearer recognition of the impact of protected characteristics such as disability, gender, age and ethnicity have on saver outcomes.
• A commitment to move quickly on value for money, starting with work with the FCA to assess what represents value for savers.
• New graphics and forecasts on how the shift towards DC saving will evolve, while recognising that funds within DB will remain substantial over the lifetime of the strategy, and the impact and reliance on the state pension.

The strategy, which will now form a core part of TPR’s annual three-year corporate planning going forward, analyses different groups of savers by generation - Baby Boomers, Generation X and Millennials.

It recognises that each group is likely to have a different level of reliance on different pension systems as well as facing different life circumstances and risks in relation to their pensions. For younger savers in particular (including Generation Z), automatically enrolled into DC pensions, factors such as investment performance and value for money will be key determinants of their pension outcomes over the next 15 years.

TPR Chief Executive Charles Counsell said: “Today we launch the strategy for our future, putting the saver at the heart of all that we do, with a clear roadmap of how we will deliver effective change on the ground to enhance and protect workplace pensions now and in the years to come.

Millions of savers rely on pensions to replace income in later life. So as a regulator, we are squarely focused on protecting savers’ pensions in the short and long term. That remains our core aim. But we must also adapt to a rapidly changing pension landscape and plan for the future. As defined contribution saving becomes the norm for millions, we must strive for better security for savers, better value for money and a determination to embrace innovation so that savers can better understand their retirement outcomes.

We will now begin putting our strategy into practice through our corporate planning process, clearly demonstrating that our new corporate priorities will underpin all the work we do.”

 

 

 

Consultation: TPR’s Approach To The Investigation And Prosecution Of The New Criminal Offences

(AF3, FA2, JO5, RO4, RO8) 

The Pensions Regulator (TPR) has published a consultation on how it will use its new criminal powers, set out in the Pension Schemes Act 2021, to investigate and prosecute those who avoid employer debts to pension schemes or put savers’ pensions at risk. The Act introduces two new criminal offences: the offence of avoidance of employer debt, and the offence of conduct risking accrued scheme benefits. The offences are likely to be enforced from autumn 2021. In addition to the actual consultation document, TPR has also published a draft of its policy intentions.

Peter Murphy, partner at Sackers, said: “Reassuringly, TPR intends its approach to be guided by statements already made in Parliament, that the new offences are not intended to give rise to a fundamental change in normal commercial practice or accepted standards of corporate behaviour in the UK. They are very much targeted at the more serious intentional or reckless conduct that is already within the scope of its existing anti-avoidance powers, such as contribution notices.

The examples of behaviour set out in the draft policy help to reinforce this intended approach. But they provide little detail, and judicial consideration of the existing anti-avoidance powers is limited. So while it might allay fears around the more incidental consequences on affected pension schemes, there will still be a lot of shades of grey and I expect the new criminal offences will result in more cautious corporate behaviour where the legal position is not so clear.”

In the case of the offence of avoidance of employer debt, the offence can apply to anyone who:

• prevents the recovery of the whole or any part of a debt due to the scheme under section 75 of the Pensions Act 1995;
• prevents such a debt becoming due;
• compromises or otherwise settles such a debt; or
• reduces the amount of such debt which would otherwise become due.

In the case of the offence of conduct risking accrued scheme benefits, the offence can apply to anyone who does an act or engages in a course of conduct that detrimentally and materially affects the likelihood of members receiving their accrued scheme benefits.

The closing date for comment on the TPR consultation is 22 April 2021. TPR will review all consultation responses and make any appropriate changes before publishing the final policy later this year. 

 

 

 

FOS: Complaints Data

(AF3, FA2, JO5, RO4, RO8)

The Financial Ombudsman Service (FOS) has published data showing a number of complaints received between 1 October and 31 December 2020 and details of complaints received about individual businesses in H2 2020. It is noted that 28% of complaints were upheld. The pensions-related details are:

Product	Enquiries	New Cases	Ombudsman	% Upheld
Personal Pensions	886	897	68	17%
SIPP	706	786	104	63%
Occupational Transfers	177	186	106	35%
SSAS	47	62	<10	-
QROPS	28	41	<10	-
FSAVC	27	35	12	-
Income Drawdowns	26	23	15	44%
SERPS	12	16	13	-
Section 32 Plans	11	15	<10	-
Pension Mortgages	<10	10	<10	-
EPPs	<10	<10	<10	-

 

 

 

PASA Publishes Guidance On Getting Ready For Pensions Dashboards

(AF3, FA2, JO5, RO4, RO8)

The Pensions Administration Standards Association (PASA) has published guidance on the ways in which UK pension schemes, trustees and providers can begin to prepare themselves for pensions dashboards. Chris Connelly, Chair of the PASA Dashboard Working Group, said: “This guidance aims to explain what schemes and providers should be doing now to incorporate the requirements for dashboards... Almost every aspect of managing a pension scheme is easier to achieve if you actively manage data. A good strategy will incorporate both ongoing and one-off scheme-specific data activities. We will also shortly issue guidance on Data Management Plans, which all pension schemes should be looking to develop and implement to manage their data strategy. Pensions dashboards, if done well, could be a game-changer in getting people to engage with their pensions and a better efficiency of pension scheme management full stop.”