Pensions Bulletin 2020/02

Our viewpoint

RPI reform consultation delayed

The promised consultation by HM Treasury and the UK Statistics Authority on the reform of the Retail Prices Index, that should have started in January (see Pensions Bulletin 2019/33) will now be launched at the 11 March Budget.  Consultation will run for a six-week period, closing on 22 April and there is a promise that both the Government and the UKSA will respond to the consultation before the Parliamentary summer recess.

The delay was announced on 13 January by means of a letter from the Chancellor of the Exchequer to Lord Forsyth, the Chair of the House of Lords’ Economic Affairs Committee, and a further letter from Sir David Norgrove, Chair of the UK Statistics Authority to Lord Forsyth.  Neither give any reason for the delay, but we understand that nothing substantive should be read into it.

When the consultations get underway the Government is to look at whether the shortcomings of the RPI should be addressed by bringing the methodology of the CPIH into it before 2030 and if so, when between 2025 and 2030 (any time before 2025 having been ruled out by the Chancellor).  The UKSA for its part will consult on technical matters concerning how to implement the proposed alignment of RPI with CPIH.


This is an important set of linked consultations, so we are pleased to see that it is not to be rushed, although this is not the first delay – the Government having taken its time to respond to the House of Lords report.

Poor quality data and the threat to automation

PASA’s white paper “Spanner in the works” and its supporting research have uncovered a significant mismatch between pension schemes’ understanding of their position on scheme data and their efforts to improve its quality.

According to PASA, more than 50% of DB schemes and 75% of hybrid schemes are running ongoing projects to improve their data and yet the same groups show around 20% and 30% respectively stating they have something other than “good” or “excellent” data.  And as for DC, PASA says that only 27% of such schemes say they have data they consider to be acceptable, whilst more than a third of DC schemes are actively working on improving the quality of their data.

The survey also reveals a lack of awareness among schemes of the quality of their data relative to their peers, and also of their own data score issued to the Pensions Regulator.  Ignorance of these scores is, it seems, greatest among DC schemes.

The research shows a high demand for new technology to be deployed, most conspicuously from DB schemes, with the focus largely on systems to support general administration.  However, there appears to be little recognition that technology cannot run efficiently without high quality data, which is the foundation of good pension scheme governance.  The research indicates that even those who know their data is poor will not address the matter in the near future, because: a) it is not a priority; and b) there is no budget available.


A thought-provoking report on the state of pension scheme data and its impact on the potential to streamline administration processes by way of automation.  Although we may have been aware that there was yet much work to be done on the data front, the statistics revealed by this research are stark.

HMRC says more about its pension scheme registration and administration service

HMRC has issued a newsletter providing an update on its Managing Pension Schemes Service for pension scheme registration and administration.  The newsletter sets out more information about its programme for delivering Phase 2 of the service as well as information about migrating schemes across from its Pension Schemes Online service.

The next significant date coming up is 1 April 2020 because from then schemes registered for the new service will have to use it to compile and submit the quarterly Accounting for Tax (AFT) return.  Schemes registered on the Pension Schemes Online service will continue to submit the AFT through that service.


Those who need to engage with this service will find the update of use, but it is frustrating that HMRC is unable to give any firm timeline for the whole of Phase 2, promising only that it will be delivered “over a number of releases throughout the next few years”.

The original plan had been to roll out Phase 2 in the 2019/20 tax year but clearly this is now not going to happen.  And until it does HMRC will not be able to decommission its Pension Schemes Online Service meaning that administrators will need to use both services.

GMP rectification – HMRC’s timetable slips again, with consequences for GMP equalisation

A passing reference in HMRC’s latest Countdown Bulletin 50 indicates that its “final data cut” on the GMP information it holds has been put back once more.

The last public announcement about timescale was back in May 2019 when HMRC said that it expected to issue its final data cut on the GMP information it holds on members from mid to late November 2019 (see Pensions Bulletin 2019/20).  The original plan was to do this in March 2019.

In its latest update no date is given but we understand that the delay could be substantial – possibly right through until the summer.


This latest delay along with delays by other parties in delivering necessary support and guidance will further contribute to many GMP equalisation exercises not being able to move much further beyond the necessary planning and discussion stages until at least the middle of 2020.  This is far from satisfactory given that over a year has now passed since the Lloyds’ judgment.

Concern expressed on State pension entitlement for low earners

In the run up to the March Budget, concerns are being expressed that the proposed increase in the threshold at which national insurance contributions are payable could disqualify some low earners from building up entitlement to the State Pension.

One of the Conservatives’ pledges in their 2019 manifesto was to increase this threshold to £9,500 pa in 2020/21 (from its current £8,632 pa), but what has not yet been made clear is whether this will have any implications for the Lower Earnings Limit, which is currently set at £6,136 pa and is the point low earners must reach in order to build up State Pension entitlement.


Clearly, if the LEL is to increase beyond its normal CPI linkage this could start to remove a number of low earners from the State pension, but it is not obvious that this is going to happen.

State pension transitional protection increases put through

Two sets of regulations have been laid which, for those reaching State Pension Age on or after 7 April 2020:

  • Increase that part of any transitional new State Pension, which when calculated as at 6 April 2016 was above the then full rate (the “protected payment”), by the increase in the CPI (so by 8.2% for the four-year period ending on 5 April 2020); and
  • Increase that part of any pension debit or credit on divorce that has been applied to such a “protected payment”, by the increase in the CPI since the debit or credit was created

The State Pension Revaluation for Transitional Pensions Order 2020 (SI 2020/6) and The State Pension Debits and Credits (Revaluation) Order 2020 (SI 2020/7) come into force on 6 April 2020 for most purposes.


These are part of the annual adjustments necessary to the new State Pension and are as expected.

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.

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