6 September 2018
DWP hands the pensions dashboard over to industry
In the first significant policy announcement of the autumn, the Government has signalled, via a wide-ranging ministerial statement issued by Guy Opperman, that the pensions dashboard is to become “an industry-led dashboard, facilitated by government”. The Government is to “continue to engage with industry” on the dashboard and “will protect pension savers and personal information by legislating where necessary”.
The statement also covers other areas of work for the DWP including a promise to launch a formal consultation on collective defined contribution schemes in the autumn and an intention to respond towards the end of the year on the recent consultation on strengthening the Pensions Regulator’s powers. The Single Financial Guidance Body is expected to be established as a legal entity in October, when the Chair and Chief Executive take up their roles. It will then launch in January when it takes on its delivery functions of money and pension guidance, and debt advice.
Quite what the statement means for the dashboard will hopefully soon become clear as the minister promises to shortly report on the findings from DWP’s long-delayed feasibility study. Until then we are no nearer knowing what the Government’s view is on crucial policy issues such as which pensions should it cover, who runs it, who pays for it and whether it is to be one dashboard or potentially a multiplicity of variants.
Having said this, although the project is not being entirely canned, as had been feared at the beginning of the summer (see Pensions Bulletin 2018/30), it does now seem to have been half-abandoned by Government.
From what we can infer, it seems that there is to be no compulsion when it comes to participation. If it turns out that the dashboard delivers little more than the DC pots from leading providers, its whole rationale will have been lost.
Some other key things to look out for this autumn
As we move into the autumn, we are expecting a number of developments in the pensions regulatory scene – some may happen in the next few weeks, whilst others may only emerge closer to Christmas. The most significant are likely to be the following:
- The results of the inquiry by the House of Lords Economic Affairs Committee into the use of the Retail Prices Index – it is possible that the report’s conclusions could start a process at the end of which the RPI is replaced by CPI-based measures, with all the implications this has for revaluation and indexation in private sector occupational pension schemes
- The High Court’s decision on the GMP inequality issues taken before it in relation to the DB pension schemes across the Lloyds Banking Group (see Pensions Bulletin 2018/28) – the hearings that started in July have concluded and it is possible that we may see the judgment in September or October
- The DWP’s promised consultation on facilitating consolidation of the DB pension sector in order to better manage the run-off of DB liabilities – we should hopefully see this in the autumn
In addition, the Pension Protection Fund will shortly be consulting on its proposals for the 2019/20 PPF levy, the Pensions Regulator should be putting the finishing touches to a number of aspects of the new master trust authorisation and supervision regime and we should have more detail from the DWP on how it intends to implement IORP II.
As ever we are promised a busy time, but what will be of greatest significance is if, in the Autumn Budget, the Chancellor announces material changes to the taxation of pensions in order to finance greater spending on the NHS.
First batch of finalised Master Trust forms and guidance published
The Pensions Regulator has published the first batch of its finalised material to aid pension schemes seeking to become authorised Master Trusts from this October. The material has been updated and clarified following a “Readiness Review” exercise that the Regulator ran for prospective Master Trusts over the summer.
There do not appear to be any significant policy shifts although there are many changes to fine points of detail in the guidance. In particular the Systems and Processes Guide has been reworked quite significantly.
The published documents cover systems and processes, scheme financial details and scheme funder issues. More material will follow including:
- Forms and guidance to assist with the “fit and proper person” checks; and
- An application index to signpost all the information and evidence required for an application
As has been said many times before, applying to become an authorised Master Trust is not a trivial task. The volume and detail of this guidance demonstrates that. And at the risk of sounding like a broken record our recommendations are that schemes take legal advice to ensure they do not fall into the definition of Master Trusts “accidentally” – and if trustees find their schemes do need to be authorised, they draw up and implement a robust project plan immediately.
Potential tax pitfalls when securing DB liability – ACA asks for clarification/law change
The Association of Consulting Actuaries has asked HMRC to make two changes to the law (or possibly issue a clarification), in the context of employers/trustees trying to carry out a project to secure DB liabilities in a reasonable and sensible way.
The ACA says that the law as it stands may mean that individuals with valuable lifetime allowance protections would lose them simply by the act of the trustees buying out a mirror image benefit with an insurer. So those individuals could suffer an additional lifetime allowance charge (potentially of a significant amount) on future benefit crystallisations through no fault of their own. And trustees and employers (provided they spot in time that their project holds the risk of putting – potentially unknown – members in this position) might feel the need to completely reshape the project, adding delays, costs and risks.
It is clearly government policy to help schemes bring DB liabilities to the safe harbour of buyout. In normal times the ACA’s request might find a friendly ear – but the huge call that Brexit makes on lawmakers’ time means we are less hopeful, to the extent the issues need any legislative correction.
Until we hear otherwise, trustees and employers working towards securing DB benefits need to consider these issues – along with the many other challenges of the pensions tax regime – early with their advisers.
Pension Schemes Newsletter 102
HMRC’s latest Pension Schemes Newsletter covers a number of administrative reminders, including various tips on using the new Manage and Register Pensions Schemes service, reminders of deadlines for annual information if operating relief at source on member contributions and process points with regard to applications to register a pension scheme and the reporting of non-taxable death benefits.
The Newsletter also emphasises the fact that with the introduction of the new master trust authorisation regime from 1 October 2018 (see Pensions Bulletin 2018/31), authorisation from the Pensions Regulator is essential in order to register a master trust with HMRC or to change the status of a registered scheme to be a master trust (or retain that status) after this date.
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.