Pensions Ready Reckoner
Clive Weber is a Partner in our Pensions & Employee Benefits Team. Please contact Clive with any queries on this Ready Reckoner.
| PARLIAMENT | |
| Topic | Bills |
| Finance Bill 2018 | Key provisions to counter pension scams: the rules for HMRC registering new pension schemes and de-registering existing schemes are tightened. The Bill is expected to receive Royal Assent shortly. |
| Financial Guidance and Claims Bill | Due to heavy criticism of the delay in banning cold-calling, Government has reconsidered – the Bill now requires the Secretary of State to set a timetable by June for making Regulations, or to explain to Parliament why this has not been possible. |
| Data Protection Bill | The Bill, implementing subject to certain permitted changes, the EU General Data Protection Regulation, continues through Parliament. Royal Assent is expected before the deadline for EU states implementation of GDPR namely by 25 May 2018. |
| White Paper “Protecting Defined Benefit Pension Schemes” | Post the BHS and Carillion failures, this is an important step on the path of a tighter regulatory regime. TPR’s powers are to be strengthened although clearance for commercial transactions will not be mandatory. A new criminal offence will be created based on “grossly reckless behaviour of directors”. TPR will have new powers to impose penalties on companies and directors ancillary to TPR exercising its contribution/financial support direction powers. Notification of corporate events will be tightened.
Timing of new legislation – a long wait! Legislation unlikely before 2019/20 due to the ‘Brexit’ log-jam! |
| Topic | Statutory instruments |
| Debt Amendment Regulations – in force 6 April 2018 | Section 75 debts can be deferred in certain circumstances where an employer exits a multi-employer DB scheme. Please see the article in this issue of Pensions Compass. |
| Contracting-out Transfer Amendment Regulations – in force 6 April 2018 | Allows the transfer of contracted-out rights without the consent of members (active, deferred and pensioner) from a formerly contracted-out DB scheme to a new scheme which has never been contracted-out, subject to meeting various conditions. Given that new schemes can no longer be contracted-out, these Regulations have been eagerly awaited. |
| Administration and Disclosure Amendment Regulations – in force 6 April 2018 and onwards | For money purchase schemes these Regulations impose new obligations on trustees to publish more information about the level of costs and transaction charges. |
| FROM THE COURTS | |
| Topic | Forthcoming important decisions |
| Sex equality
Lloyds Banking Group To be heard in June 2018 |
GMP equalisation claims by female employees of Lloyds Bank. The High Court is to be asked to decide whether the trustee is required to equalise benefits for the effect of GMP and, if so, how benefits should be equalised. An eventual referral to the Court of Justice of the European Union would seem possible! |
| RPI/CPI
Barnardo’s Court of Appeal to be 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. |
| BT Telecommunications Pension Scheme
Court of Appeal – hearing date awaited |
BT and the BT Trustees asked the High Court for clarity on whether the index for increases to pensions in payment can be changed from RPI to CPI. The High Court decided that RPI has not become inappropriate for the purposes of indexation under the rules of the scheme. |
| TPR’s anti-avoidance powers
Box-Clever (ITV)
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The appeal to the Upper Tribunal was heard in January 2018 and judgment is awaited. The case concerns the scope of TPR’s anti-avoidance powers in the context of joint ventures. |
| Proper exercise of Trustee powers
British Airways Court of Appeal hearing 1 May 2018 |
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. 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, 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 due to be heard in the Court of Appeal in June 2018. Given the increase in significant DB to DC transfers and the opportunity to pass on wealth within DC flexi-access wrappers, the Inheritance Tax effect of such transfers are firmly in HMRC’s sights. We are advising on several cases in this area and so please contact us if you have queries. |
| TPR v Crest Healthcare
Prosecution for providing false or misleading information to TPR re auto-enrolment compliance |
It is reported that on 17 March 2018 Crest Healthcare pleaded guilty to providing false or misleading information and to wilfully failing to comply with its auto-enrolment duties, and that sentencing is adjourned to 15 May 2018. This undermines the need to take auto-enrolment compliance seriously. If you have any doubts concerning compliance, please contact us. |
| Contributions paid by members in specie
Sippchoice v HMRC Heard on 26 February 2018 in first Tier Tax Tribunal |
The issue in this case is whether member contributions paid by way of transfer of assets to their SIPP qualified for tax relief. This is an important test case for HMRC.
In its decision issued on 10 March 2018, the First Tier Tax Tribunal decided that the in specie member contributions qualified for tax relief. The Tribunal considered the particular documentation reflected a legally binding obligation to make contributions and that the meaning of “contributions paid” in section 188 Finance Act 2004 was satisfied. In our view, HMRC are likely to appear this decision. This is an area where much may depend on the particular SIPP documentation and paperwork. |