Bulletins | September 26, 2017

Pensions Ready Reckoner – September 2017

Clive Weber, Partner, Pensions & Employee Benefits Team. Please contact Clive with any queries on this Ready Reckoner.

Topic Key Acts of Parliament
Finance Bill 2017 The following provisions omitted earlier in the year due to the snap General Election are reinstated and the Finance Bill 2017 was published on 8 September 2017 (to have retrospective effect to 6 April 2017):

  • money purchase annual allowance where benefits flexibly accessed reduced from £10,000 to £4,000; and
  • cost of pensions advice up to £500 per tax year to be exempt from income tax where cost met or reimbursed by an individual’s employer.
Finance (No. 2) Bill This Bill will be introduced after the Autumn Budget on 22nd November 2017. To combat pension scams, the Bill will require all new pension scheme registrations to be made through an active company, with HMRC having discretion to register schemes with a dormant sponsoring employer. The new requirement will also apply to existing pension schemes where there is a dormant sponsoring employer.
Finance Guidance and Claims Bill The 3 existing public services – Money Advice Service, Pensions Advisory Service and Pensions Wise – are to come under one new statutory organisation. The Bill is presently going through Parliament and the new organisation is expected to operate from Autumn 2018.
Amendments to Pension Schemes Act 1993 (“PSA 1993”) re statutory and non-statutory transfers Changes to PSA 1993 are proposed as part of the Government’s campaign against pension scams, see also Finance (No. 2) Bill above. The PSA 1993 amendments are not likely to apply until late 2018.
Topic Key statutory instruments
Money Laundering Regulation 2017, SI 692 New Regulations which came into force on 26 June 2017, as required by the EU Fourth Money Laundering Directive. The new Regulations apply to relevant persons acting in the course of business in the UK, including pension trusts albeit on a modified basis.
Risk Warning Regulations 2017, SI 717 New Risk Warnings are required in relation to members considering foregoing guaranteed annuity rates (“GARs”) or other ‘safeguarded flexible benefits’. The changes take effect on 6 April 2018, to give schemes time to adjust.


Topic Recent important decisions
Sex equality
Walker v Innospec, Supreme Court 12 July 2017
The Supreme Court reversed the Employment Appeal Tribunal and Court of Appeal, and upheld Mr Walker’s claim. The UK legislation, which restricts survivor benefits for civil partners and same sex marriage partners to the members’ pensionable service from 5 December 2005, is incompatible with the EU Directive and invalid.
Employer’s duty of good faith
BBC v Bradbury , 28 July 2017 and IBM v Dalgleish, 3 August 2017
The Court of Appeal in both the BBC and IBM cases decided that the employers had complied with their duty of good faith. The IBM decision in particular explains the proper legal test – essentially that the employer has taken into account relevant (and not irrelevant) factors, and has acted rationally and not reached a decision that no employer acting reasonably could have reached. See the article [hyperlink] in this Pensions Compass.
Topic Pending decisions
Barnardo’s v Buckinghamshire
Permission granted to the employer on 6 April 2017 to appeal to the Supreme Court against the Court of Appeal’s November 2016 judgment preserving the status quo. The appeal is expected to be heard in 2018.
British Airways v Airways Pension Scheme Trustee
The High Court decided that, in granting a pension increase above CPI, the Trustee had acted properly. The appeal to the Court of Appeal (due to be heard in May 2018) 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
  • that amending the scheme to introduce the power to award increases and exercising that power were both invalid as being contrary to the proper purposes of the scheme.

Our comment: to some extent this case stands on its own given 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. However, it 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 the June 2017 issue of Pensions Compass [ insert hyperlink].

Inheritance tax on death benefits, transfers between pension schemes
HMRC v Staveley
HMRC are claiming inheritance tax following the late Mrs Staveley’s transfer of her pension rights shortly before her death. The Court of Appeal hearing is in June 2018. Given the current scale of transfers from DB to DC schemes, this is an important case albeit predating amendments to the inheritance tax legislation (re members’ omissions to exercise pension rights) and the introduction of the March 2015 pension freedoms. Our Pensions and Private Client Terms provide comprehensive advice in this developing area.
United Biscuits v VAT
This case is due to be heard in the High Court in October 2017. The outcome may affect HMRC’s approach to VAT, including HMRC’s proposal for tripartite contracts between employer, trustees and services provider – requirement not yet fully in force. The present transitional period to 31 December 2016 for current arrangements may be extended to 31st December 2017 or later bearing in mind BREXIT.


Date Topic Item
August 2017 Compliance and enforcement TPR’s quarterly bulletin describes enforcement actions taken by TPR including trustee appointments, fines for not filing annual returns and chair statements, TPR notices under section 72 Pensions Act 2004 requiring information and fines for non-compliance with the auto-enrolment legislation.
August 2017 Professional trustee description Describes the test TPR applies to decide whether there is a professional pension scheme trustee acting. This is also now featured in the information required from schemes in their annual return to TPR.
August 2017 Court of Appeal ruling in ‘Box Clever’ The employer, ITV failed in its attempt to prevent TPR introducing new evidence in TPR’s case against ITV. Background – in 2011 TPR’s Determinations Committee concluded TPR was entitled to issue a Financial Support Direction to ITV. ITV are appealing this decision and the case will be heard by the Upper Tier Tribunal in January 2018. The case will be watched with interest as it will be the first time TPR’s anti-avoidance powers have been tested in full in the Upper Tribunal.


Area Topic
August 2017 Government response on Corporate Governance reform published. The response has little to say on pensions. One waits to see what other duties, if any, will be placed on employers as a result of the Government’s review of DB Pensions.
Valuations of GARs and other ‘safeguarded’ benefits Regulations 2017 The Regulations specify how such benefits should be valued for the purposes of the £30,000 threshold for independent advice in relation to transfers. The Regulations are subject to the Parliamentary affirmative approval process. Assuming they are passed, they are intended to apply from 6 April 2018.
Data Protection Bill Publication of the Bill is awaited. The Bill will implement the EU GDPR from 26 May 2018. See our article on the GDPR in the February 2017 issue of Pensions Compass [insert hyperlink]