UK: Pensions Snapshot - February 2018

Last Updated: 14 February 2018
Article by Philip Goodchild

This edition of snapshot summarises some of the key legal and regulatory developments that occurred up to the end of January 2018 in relation to occupational pension schemes. The topics covered in this edition are:

BT case – High Court rules that RPI was not "inappropriate" for the purposes of uprating pensions

BT brought an action to seek a declaration that the wording in a set of rules for its pension scheme would allow it to move away from RPI as the measure for uprating pensions. The relevant wording under consideration required that RPI had become "inappropriate" for these purposes (and another set of scheme rules provided that, in order for RPI to be moved away from, that index ought to have been amended such that it became invalid).

The court held that RPI had not become inappropriate for the purposes of uprating pensions under the BT pension scheme. Various factors were considered such as changes in the composition of RPI and the more widespread use of CPI as an alternative to RPI. None of these factors were enough for the court to hold that that RPI had become inappropriate (or amended such that it had become invalid).

The case is another example of the "rules lottery" which schemes find themselves subject to when it comes to pension increase wording, with the peculiarities of the scheme's particular wording dictating whether or not such a change can be made.

Stephenson Harwood acted for the representative beneficiary in the case.

Consultation on "new" standards for professional trustees

The Professional Trustee Standards Working Group (PTSWG) is consulting on a series of standards for professional trustees of occupational pension schemes. These standards, which are intended to improve the quality of professional trustees and eliminate poor practices from the market, cover the following areas:

  • fitness and propriety
  • integrity
  • expertise and care
  • impartiality and conflicts of interest
  • professional behaviour
  • systems and controls

There are also additional standards for professional trustees who act as Chairs of trustee boards and/or have sole trustee appointments.

The standards will apply to anyone falling within the Pension Regulator's description of a "professional trustee" as set out in its August 2017 policy document. The Regulator will consider compliance with them as an indicator of fitness and propriety.

The standards will be applied on a "comply or explain" basis whereby professional trustees will be expected to describe how they meet each of the standards or explain why they have not done so. It is likely that most professional trustees are, broadly speaking, already compliant with the new standards, so demonstrating compliance is unlikely to be an onerous exercise. From an employer and trustee perspective, the standards should prove useful in helping to clarify what they can expect from a professional trustee.

The consultation closes on 2 March 2018 and the standards are expected to be published by PTSWG in April/May 2018. In addition, PTSWG is also developing an accreditation framework which professional trustees will be expected to achieve. Details are expected to be published later this year.

Amendments to HMRC Reporting Requirements

The Registered Pension Schemes and Overseas Pension Schemes (Miscellaneous Amendments) Regulations 2018 (the Regulations) came into force on 30 January 2018.

The Regulations made amendments to:

  1. the Registered Pension Schemes (Provision of Information) Regulations 2006 (S.I. 2006/567) (the Provision of Information Regulations); and
  2. the Pension Schemes (Information Requirements for Qualifying Overseas Pension Schemes, Qualifying Recognised Overseas Pension Schemes and Corresponding Relief) Regulations 2006 (S.I. 2006/208) (the QROPs Information Regulations).

Ceasing to be a Master Trust is a Reportable Event

The Regulations amended the Provision of Information Regulations with effect from the tax year 2018-19 and subsequent tax years, to provide for a reportable event when a scheme ceases to be a Master Trust Scheme.

As a reminder, a Master Trust Scheme is defined in section 1 of the Pension Schemes Act 2017 as being an occupational pension scheme which:

(a) provides money purchase benefits (whether alone or in conjunction with other benefits); 
(b) is used, or intended to be used, by two or more employers; 
(c) is not used, or intended to be used, only by employers which are connected with each other; and
(d)  is not relevant public service pension scheme. 

Where a registered pension scheme ceases to be a Master Trust Scheme, the scheme administrator must provide an event report to HMRC confirming that the scheme has ceased to be a Master Trust Scheme and the date which this occurred.

In its Explanatory Memorandum to the Regulations (at paragraph 7.5), the Government explained the rationale behind this change as intending to align "HMRC's tax registration process for pension schemes, with the Pensions Regulator's (TPR) new authorisation and supervision regime for master trust schemes. Legislation in the Finance Bill 2017-18 will introduce changes to the tax registration and de-registration rules, so that HMRC can refuse to register and can de-register a master trust that does not have TPR authorisation. This requirement to notify HMRC when a scheme becomes or ceases to become a master trust scheme will provide HMRC with the information it requires to consider the registration of the scheme".

Consequential amendments to reflect the reduced annual allowance

The Regulations also made consequential amendments to the QROPs Information Regulations to reflect the reduction in the level of the money purchase annual allowance from £10,000 to £4,000 with effect from 6 April 2017.

The QROPs Information Regulations specify the reporting requirements for the provision of information by scheme administrators of registered pension schemes and scheme managers of overseas pension schemes to registered pension scheme members. One of the obligations to members under the QROPs Information Regulations is that the scheme administrator must provide a member with a statement when he/she may be first flexibly accessing his/her pension rights. The amendments made to the QROPs Information Regulations make minor changes to that provision in so far as to reflect the reduction in the money purchase annual allowance from £10,000 to £4,000. These changes took retrospective effect from the tax year 2017-2018.

PPF releases its new suite of standard form contingent asset agreements

The Board of the Pension Protection Fund (PPF) has issued new versions of all of its standard form contingent asset arrangements and has overhauled its contingent asset guidance.

By way of background, contingent asset arrangements provide a pension scheme with assets where certain events occur, such as an insolvency event in respect of the scheme's employer. Subject to meeting a number of conditions, the PPF will take account of a contingent asset when it calculates a scheme's risk based levy – potentially resulting in a reduction in a scheme's PPF levy. Among other conditions for PPF recognition, a contingent asset arrangement must be in the PPF's standard form and various certifications need to be given by the pension scheme's trustees to the PPF both at inception and annually thereafter (normally before the end of March each year).

Any new contingent asset being entered into on or after 18 January 2018 must use the updated versions issued in January 2018.

Contingent asset arrangements executed under an appropriate earlier PPF standard form document before 18 January 2018 can be recertified as normal for the 2018/19 levy year. However, for the 2019/20 levy year, the PPF anticipate that they will not recognise pre-January 2018 style standard form "Type A" and "Type B" arrangements with a fixed (as opposed to floating) cap element. Schemes with those older documents would need to adopt the new standard form arrangement for the PPF to take the arrangement into account for levy purposes. This will be a more involved process and the PPF recommends that schemes affected by this development plan ahead for it.

In addition to the above changes, from 2018/19, as part of certifying or recertifying any Type A contingent asset that provides a levy reduction of £100,000 or more, the trustees will need to obtain a formal guarantor strength report from a professional adviser.

Finally, the PPF has also made some changes to the certification process for Type A guarantees where there is more than one guarantor.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions