DWP proposes some quick fixes to the auto-enrolment legislation for new employers

Somewhat late in the day, the DWP has recognised that there is an operational flaw and some unfairness in the auto-enrolment requirements as they will apply to employers that are due to become subject to the auto-enrolment duties from 1 April 2017 and who therefore fall outside the auto-enrolment staging profile.

As a result it has launched a quick consultation on the necessary changes to regulations for such “post-staging employers”, which it needs to put into force by 1 April 2017.

The DWP is proposing the following:

• New employers will become subject to the auto-enrolment duties on the day that the first worker begins to be employed (as opposed to the day in which PAYE income is first payable); and
• New employers will be able to defer automatic enrolment by three months

A number of reasons are given as to why the first measure is necessary for such employers, including that (in the absence of a staging date) the PAYE income trigger would result in a delay in the employer duties applying and not provide a definitive date against which the Pensions Regulator could consider enforcement action.

Although it is not stated explicitly, our understanding is that such new employers remain subject to an unchanged core employer duty (which operates in relation to jobholders between age 22 and State Pension Age with earnings exceeding an earnings trigger in a pay reference period).

Responses are sought to the consultation by 3 March 2017.

Comment

These are entirely necessary changes and should be welcomed.  In particular, it would have been perverse if new employers were not permitted the three month postponement period that has been available to every single employer within the staging period.

DB transfer quotations increase further following Brexit referendum

LCP has issued its latest quarterly update on the pattern of transfer quotations and payments for the DB schemes we administer.

Our latest findings include:

• The number of quotes in Q4 2016 was the highest we have seen in any quarter since we started our analysis three years ago; up 64% from the same period last year
• The average age of those taking transfer values has increased further over this period, perhaps indicating that more people are taking transfer values at retirement, encouraged by the high transfer value amounts quoted in Q3 and Q4 2016 as a result of the sharp falls in gilt yields following the Brexit referendum
• A new trend that seems to be emerging is that, whereas up till now most of the increase in quotation activity has been among the over-50s, in Q4 2016 the number of transfer value quotation requests from the under 50’s rose sharply. Quotation requests for the under 50s were up 46% compared to the same period last year.  We will shortly see if this translates into more of these members actually taking transfers

More details, including charts, are available here.

Supreme Court rules on cohabitee survivors’ pensions

In a judgment last week that attracted widespread publicity, the Supreme Court ruled that the Local Government Pension Scheme in Northern Ireland cannot impose a requirement for a nomination form to be completed before paying a cohabitee’s pension to the partner of a scheme member who has died.

Comment

Although this case will have a direct impact on other public sector pension schemes, we believe that there is little direct read across to the private sector.  For further details see our News Alert.

This Pensions Bulletin does not constitute advice, nor should it be taken as an authoritative statement of the law.  For further help, please contact David Everett at our London office or the partner who normally advises you.