Welcome to the Autumn 2015 edition of Osborne Clarke’s quarterly trustee update. This summarises the latest pensions developments of interest to trustees and all those involved with the pensions industry.
This edition includes details of pensions announcements in the Summer Budget, a consultation on pension transfers and early exit charges and several developments that may require action, amongst other issues.
If you would like to discuss any of the content, or have a subject that you would like us to cover in next quarter’s edition, please let one of us know. Our contact details are set out below.
Summer Budget: we report the key pensions points that you need to be aware of
The Summer Budget was the first budget from a majority Conservative government for nearly twenty years. It contained various pensions announcements including a taper on tax relief for high earners. Read more about the key pensions points. The Treasury issued a consultation on pensions tax relief which could involve far reaching reforms to the current system. Read more about the consultation. There were also points of interest in the Budget on public sector pensions. Read more public sector pensions highlights from the Summer Budget.
Freedom and choice: are there changes ahead on transfers, exit penalties and advice?
The government continues to develop the DC freedom and choice agenda with the publication of a consultation on ways to make transfers quicker and smoother, to ensure that early exit penalties are appropriately limited, and to consider requirements for financial advice on transfers. Read more.
Action required! Developments that may require changes
There are a number of forthcoming developments that may require trustees and employers to take action soon. It is important that schemes are prepared for the abolition of DB contracting out from 6 April 2016. Our update sets out the latest developments and an action plan for employers and trustees. Read more.
DC short service refunds are being abolished from 1 October 2015 and affected schemes may need to be amended. Read more.
Schemes that contain a power to pay surplus to the employer may need to pass a trustee resolution to retain this power prior to 6 April 2016. Read more.
Regulatory round-up: we give you the highlights from TPR and the PPF this quarter
Are you up to speed with the strength of your scheme’s employer covenant? TPR has issued guidance to help, and in this post we give our view on the three steps required to properly review the employer covenant. Read more.
The PPF has issued guidance on the approach it will adopt in relation to pre-packaged administrations. Read more.
In this post we give you a speed read of developments from TPR, the PPF and HM Treasury this quarter. Read more.
Pensions Ombudsman decisions
The new Pensions Ombudsman has announced that where an award is made for distress or inconvenience, it is likely to be a minimum of £500 – a higher threshold than we have had previously, which may therefore affect settlement negotiations arising from member complaints. Read more.
Timing on transfers – this decision from the new Pensions Ombudsman indicates trustees do have some latitude on timings for transfers in certain circumstances. Read more.
A recent PPF Ombudsman decision demonstrates the PPF’s determination that guarantees must be shown to be able to fulfil their claimed value on employer insolvency. Since the decision the PPF has issued helpful guidance for trustees which will assist them in ensuring that guarantees do fulfil the PPF requirements. Read more.
Public sector: deficit management and golden goodbyes
It is estimated that funding deficits in the LGPS amount to £47 billion. The LGPS Scheme Advisory Board has set up a deficit management working group to form a strategy aimed at having a stronger, more flexible approach to deficit management. In this post we report on the recommendations that the working group has made to the Department for Communities and Local Government. Read more.
Between 2011 and 2014 the cost of exit payments in the public sector was around £6.5 billion, and more than £1 billion of this cost resulted from exit payments over £100,000. The government has issued proposals to cap the total value of exit payments at £95,000. We examine the detail of the proposals, and in particular the possibility that this could limit early redundancy pensions in the LGPS. Read more.
What’s on the horizon?
Our pensions timeline highlights forthcoming pensions developments of interest to trustees and employers. Read more.