Clive Weber, Partner, Pensions & Employee Benefits Team. Please contact Clive with any queries on this Ready Reckoner.
| PARLIAMENT | ||
| Legislation | Enacted | Effect |
| Finance Act 2018 | 15 March 2018 | Pension scams: HMRC’s powers to register and de-register schemes are tightened, especially where the employer is “dormant”. |
| Pension Schemes Act 2017 | 27 April 2017 | Regulation of Master Trusts to protect members. Most of the provisions will apply from a date to be appointed, expected to be 1 October 2018. |
| Financial Guidance and Claims Act 2018 | 10 May 2018 | · The Single Financial Guidance Body expected to replace Money Advice Service, The Pensions Advisory Service and Pension Wise on 1 October 2018.
· Section 21 requires the Government to make Regulations banning “unsolicited direct marketing related to pensions” by end of June 2018. If the Regulations not made by then the minister to explain to Parliament why not and to set a time table for making the Regulations. |
| Data Protection Act 2018 | 25 May 2018 | Implements the EU General Data Protection Regulation in the UK, including implementing variations (“derogations”) permitted by the GDPR. |
| Data Protection (Charges and Information) Regulations 2018 | Regulations made on 10 April 2018 and took effect on 25 May 2018 | Requirements for data controllers to pay fees to the Information Commissioner and to supply the Commissioner with specified information. |
| Multi-Employer Pension Schemes Bill | Published as Private Member’s Bill on 11 June 2018 | The Bill seeks to address the burden of Section 75 debts on unincorporated employers (e.g. plumbing businesses). More radically, the Bill seeks to replace the buy-out basis with the scheme specific funding basis. Our comment: the Government is unlikely to support the Bill and therefore it is likely to lapse. |
| Divorce (Financial Provision) Bill | Second Reading in House of Lords 11 May 2018 | This Bill started in Parliament in May 2016! It is now making progress. It seeks to introduce as a fair starting point equal division of pensions etc. acquired after marriage. |
| Amendments to Investment Regulations | June 2018 | The DWP is consulting on new Regulations requiring trustees to consider “financially material considerations” which is defined as including environmental, social and governance factors, including climate change, in carrying out their investment duties. The amendments contemplated will, if made, come into force in October 2019 at the earliest. |
| FROM THE COURTS | |
| Topic | Forthcoming important decisions |
| Sex equality
Lloyds Banking Group To be heard in July 2018 |
GMP equalisation claims by female employees of Lloyds Bank. The High Court is asked to decide whether the trustee is required to equalise benefits for the effect of GMP and, if so, how benefits should be equalised. Onward appeals seem a racing certainty. |
| RPI/CPI
Barnardo’s Court of Appeal heard on 12/13 June 2018 |
Appeal to the Supreme Court against Court of Appeal’s decision that no switch from RPI to CPI was possible based on the rules of the Scheme. The issue of whether members have accrued rights to RPI increases protected by section 67 is also likely to be decided. Both the High Court and Court of Appeal decided there was no such protection. |
| RPI/CPI
BT Telecommunications Pension Scheme Court of Appeal – to be heard on 9 October 2018 |
BT and the BT Trustees asked the High Court whether the index for increases to pensions in payment can be changed from RPI to CPI. The High Court decided RPI has not become inappropriate for the purposes of indexation under the rules of the scheme. Now we await the Appeal Court hearing. |
| TPR’s anti-avoidance powers
Box-Clever (ITV)
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Scope of TPR’s anti-avoidance powers in the context of joint ventures: on 18 May 2018 the Upper Tribunal found in favour of TPR. However, this could turn out to be a pyrrhic victory for TPR – the ITV group has appealed to the Court of Appeal. The Appeal Court hearing date is awaited.
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| HMRC contributions paid by members in specie
Sippchoice v HMRC Heard on 26 February 2018 in first Tier Tax Tribunal |
Issue: whether member contributions paid by transfer of assets to a SIPP are deductible for tax purposes. This is an important test case for HMRC. In its decision on 10 March 2018, the First Tier Tax Tribunal decided in the member’s favour. The Tribunal considered the documentation reflected a legally binding obligation to make the contributions and that the meaning of “contributions paid” in section 188 Finance Act 2004 was satisfied. HMRC are appealing this decision. This is an area where much depends on the particular SIPP documentation. |
| HMRC
Bayonet v HMRC High Court |
On 16 May 2018 the High Court decided HMRC cannot deem someone to be a “scheme administrator” and that a scheme sanction charge for an unauthorised payment can be made only against the persons who are the actual scheme administrator. |
| Proper exercise of Trustee powers
British Airways Court of Appeal hearing in May 2018 – decision awaited |
The High Court in May 2017 decided that the Trustee had acted properly in granting a pension increase above CPI. The appeal to the Court of Appeal is on two grounds:
· the increase awarded is improper as the purposes of the scheme, under its trust deed, prohibits “benevolent” or “compassionate” payments; and · amending the scheme to introduce the power to award increases, and exercising that power, are both invalid as contrary to the proper purposes of the scheme. To some extent this case stands on its own as the amendment power is vested unilaterally in the Airways Trustee and the power to award such increases is also solely in the Trustee’s hands. The case also raises wider issues as to how far trustees should take employer interests into account. See also our article on the High Court decision in our June 2017 Pensions Compass. |
| Inheritance tax and pension transfers
Staveley |
Appeal from Upper Tribunal decision heard in the Court of Appeal in June 2018, judgment reserved. Given the increase in significant DB to DC transfers and the opportunity to pass on wealth within DC flexi-access wrappers, the Inheritance Tax treatment of such transfer is in HMRC’s sights. |
| Debt Regulations
G4S plc v G4S Trustees
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Issue: whether scheme open, or frozen under the Debt Regulations. The High Court has properly decided that members retaining a final salary link were no longer in pensionable service, and accordingly the scheme was a frozen scheme. |
| Debt Regulations
PS Trustees v China Shippy High Court (date awaited) |
Issue: whether a “segregated” section of the scheme exists for section 75 purposes. |
| Auto-Enrolment
TPR v Workchain Limited 7 June 2018 |
TPR successfully prosecuted Workchain for improperly getting temporary workers out of the NEST pension scheme, after NEST reported its concerns. The sentencing of the 2 directors and 5 senior staff will be considered at the Crown Court on 28 June 2018. The prosecution is under the Computer Misuse Act 1990. According to TPR’s press release, the maximum penalties are 2 years’ imprisonment and/or an unlimited fine. |