A recap of latest developments in the fast-moving world of occupational pension schemes.






Tax changes from 06/04/2016

Under the Finance (No. 2) Act 2015:

  • Annual Allowance restricted for high earners from 06/04/2016
  • Pension input periods aligned with tax years from 06/04/2016

Further tax changes from 06/04/2016
(to be enacted)

  • Draft legislation published for Finance Bill 2016: the Lifetime Allowance reduced to £1 million from the present £1.25 million from 06/04/2016 subject to the right to elect for protection. Inheritance tax not to apply to unused drawdown funds.
  • Budget Day 16/03/2016 = Expected major reform of pension taxation

Single State Pension from 6 April 2016 – end of DB contracting-out

  • Employer power to amend scheme rules within limits came into force on 6 April 2015.
  • Trustees should ensure members are informed of cessation of contracting-out (Disclosure Regulations).
  • Scheme rules should be checked in case amendments needed – unclear whether the "schemes that were formerly contracted-out scheme regulations" can be relied on to override scheme rules.

Secondary annuity market

On 15 December 2015 the Government announced it will go ahead with the secondary annuity market from April 2017. The Financial Conduct Authority to make rules to ensure that authorised firms check whether annuity holders have received "advice" before holders sell their annuity income – see the separate article elsewhere in this Bulletin.

DB to DC transfers

Only certain representatives of authorised financial advisers to be allowed to advise on DB to DC transfers. This follows concerns that financial advisers may in some cases be delegating this function inappropriately.

GMPs – sex equalisation

Government still intends to legislate but timing uncertain.


Pension flexibility

  • Consultation on Regulations which, if implemented, will from 6 April 2016 (1) oblige trustees of DC occupational pension schemes to give generic risk warnings before members flexibly access benefits (at present generic warnings are recommendations) and (2) deal with pension flexibilities on divorce orders – a topic not addressed in April 2015 when pension flexibility was introduced. Please see the separate article elsewhere in this Bulletin.
  • Responsibility for "Pension Wise" transfers from the Treasury to DWP from 1 April 2016.

Employer debts: changes for non-associated multi-employer schemes

The consultation on possible changes to the employer debt legislation opened on 12 March 2015 and closed on 22 May 2015 since when nothing further heard...

PPF: non-UK insolvencies

Consultation on proposed new Regulations to treat non-UK employers' insolvency as qualifying in certain circumstances, to enable the scheme to enter the PPF.  Please see the separate article elsewhere in this Bulletin.

Auto-enrolment: LLP members

Government is consulting on Regulations enabling limited liability partnerships to exclude certain of the LLP's members (i.e. those who are genuinely partners in the business) from their auto-enrolment obligations. The consultation was announced today, 26 January, and closes on 16 February 2016. It is anticipated the Regulations will apply from April 2016, so Government is working to a very tight timetable!  For a more detailed exposé of the problems to which this issue gives rise, please see our July 2014 Bulletin.




Data protection

Progress continues with the new data protection legislation. The Permanent Representatives Committee of the EU Council has agreed the text of the proposed new Data Regulation with the relevant EU Committee. It is likely the full text will be agreed in Spring 2016. We covered this topic most recently in our September 2015 Bulletin.




Much activity, especially in the Court of Appeal.



Interpreting scheme provisions

BCA Pension Plan

A cost effective way to correct scheme rules: the High Court made an Order under section 48 Administration of Justice Act 1985 authorising trustees to apply the scheme rules in a particular way, on the basis it was clearly necessary to read certain words into the scheme rules to make sense of them.  Please see the separate article elsewhere in this Bulletin.

VAT – recipient of services

Airtours v HMRC

The taxpayer's appeal to the Supreme Court is due to be heard in January 2016. In 'Airtours' PWC provided its services (financial report on Airtours) under a tripartite agreement between PWC, Airtours and Airtours' bankers. Airtours sought to reclaim input tax. HMRC refused the claim on the basis that PWC's services were supplied to Airtours' bankers, and not to Airtours.

Bearing in mind HMRC's present stance on VAT and suppliers' services to pension trustees and employers under tripartite contracts (as recommended by HMRC), the Supreme Court's decision in 'Airtours' is eagerly awaited.

Sex equality

Walker v Innospec

In October 2015 the Court of Appeal dismissed Mr Walker's appeal. The Court upheld the Equality Act 2010 exception excluding benefits prior to 5 December 2005 in calculating Mr Walker's survivor pension in respect of his deceased civil partner.  We covered this decision in more detail in our November 2015 Bulletin.

Auto-enrolment: working or ordinarily working in Great Britain

Fleet Maritime Services v Pensions Regulator

Some of the crew resided in the UK and some outside. Most of the crew's working time was spent cruising outside the UK. The High Court gave directions on the proper application of the auto-enrolment legislation for 'overseas' element cases.

Bankruptcy and elections for pension

Horton v Henry

Court of Appeal hearing due January 2016 – in the light of the April 2015 pension flexibilities, this is an important forthcoming decision on whether trustees in bankruptcy can oblige bankrupt individuals to access DC funds under the new flexibilities, to enhance creditors' returns.

Employer duties

IBM v Dalgleish

Court of Appeal hearing due before 31 March 2016 – the High Court decision in 2014/15 that IBM were in breach of the duty of good faith, and the Court's remedies awarded as a consequence of the breach, are being appealed.


Indemnity for section 75 debt

Heis v MF Global Services

Arrangements between group companies including indemnity provisions were, according to the High Court in May 2015, wide enough to include any section 75 debt falling due. The appeal is due to be heard by the Court of Appeal in May 2016.


Defective deeds

Briggs v Gleeds

In July 2015 the High Court held that a series of amending deeds were legally ineffective as they had not been properly executed. This and other matters, including the meaning of the scheme's alteration powers, are being appealed and are due to be heard in the Court of Appeal in July 2016.

Employer's duty of good faith

Bradbury v BBC

Court of Appeal hearing due in May 2016. The High Court had previously decided in May 2015 that the BBC was not in breach of its employer's duty of good faith by imposing a cap on pensionable salary.


Buckinghamshire v Barnardo's

The High Court decided in July 2015 that RPI had not been replaced by CPI and therefore under the wording of the scheme rules the trustee could not switch to CPI. This finding is being appealed. We understand that, if the appeal goes ahead and succeeds on this point, scheme members will cross-appeal on section 67 Pensions Act 1995. In other words, seek to reverse the High Court's decisions in Qinetiq and Arcadia that switches in index for the future under scheme wording such as "RPI or some other index" does not interfere with members' past service rights protected under Section 67. We covered this decision in more detail in our November 2015 Bulletin.

RPI/CPI, take two

British Airways v Spencer

British Airways are seeking to overturn the decision of the BA pension scheme trustees to give themselves power to award discretionary pension increases, following the Government's switch from RPI to CPI for statutory purposes.

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.