Pensions: what's new this week 11 April 2022
11 April 2022
Welcome to your weekly update from the Allen & Overy Pensions team, covering all the latest legal and regulatory developments in the world of occupational pensions.
This week we cover topics including: New HMRC GMP equalisation guidance; PPF future changes; PLSA and ABI campaign to boost pensions engagement; TPR enforcement; Data protection guidance on relaxation of Covid-19 restrictions.
- New HMRC GMP equalisation guidance
- PPF future changes
- PLSA and ABI campaign to boost pensions engagement
- TPR enforcement
- Data protection guidance on relaxation of Covid-19 restrictions
HMRC has published a new GMP equalisation (GMPE) newsletter, with guidance on making top-up payments to correct previous transfers which did not account for GMPE (as a top-up transfer or lump sum); and GMP conversion.
The guidance includes some helpful clarifications on areas that have been causing schemes issues. For example, it confirms that, for most members, payment of a transfer top-up or lump sum will have no additional annual allowance implications (as explained in previous guidance). It confirms that previous block transfers are not invalidated by a further GMPE payment. It also confirms a generous interpretation of time limits for a lump sum payment to be made following a ‘relevant accretion’ (this tax rule allows lump sum payments of up to GBP10,000 where specified conditions are met). This may make it easier for schemes to use these lump sums to settle GMPE liabilities, although HMRC has also stated that the relevant accretions route cannot be used where the original transfer took place before 6 April 2006.
On conversion, the guidance notes that HMRC is still considering this ‘complex area’ and the potential need for legislative change. It does clarify some points, including the expected tax position for existing pensioners, those retiring imminently and members who left pensionable service prior to 6 April 2006.
The Pension Protection Fund (PPF) has published its three-year strategic and business plans, confirming its strategic priorities from 2022 to 2025. Some points of practical interest for schemes include the following:
- the PPF will be looking to further simplify how it calculates the PPF levy in the future, ensuring value for money;
- the implementation of changes following the Hampshire and Hughes cases (which found that the PPF compensation cap was unlawful) will be completed;
- the PPF will work with the DWP to agree an approach for implementing the Bauer judgment (which found that benefits cannot be reduced so as to leave an individual living below the at-risk-of-poverty threshold); and
- there will be a programme of ongoing improvements to the Dun & Bradstreet web portal which levy payers use to view insolvency risk scores.
The Pensions and Lifetime Savings Association (PLSA) and Association of British Insurers (ABI) have launched a campaign to boost people’s understanding of and engagement with their pensions. The campaign will run over autumn and winter this year through social media and a variety of digital and written communications from pension schemes. Resources will be widely promoted and made freely available for use by all those who wish to participate across the pensions industry, including employers, regulators, and government departments.
The former owner of Norton Motorcycles has received an eight-month suspended prison sentence for each of three counts of breaching employer-related investment (ERI) rules. He was also disqualified from acting as a company director for three years and ordered to pay The Pensions Regulator’s (TPR) costs of GBP20,716. The charges relate to three DC schemes of which the individual was the sole trustee; more than 5% of the value of the assets of each scheme was invested into his business, in breach of the ERI restriction.
The Pensions Ombudsman (TPO) has previously upheld complaints by members of the schemes about various actions by the former owner/trustee, and also ordered him to make a payment to restore the funds paid out in breach of trust. TPO referred the ERI issue to TPR, which pursued a criminal conviction. The judge took into account an early guilty plea, but also the damage done to members’ mental wellbeing and confidence in pension saving, as well as financial harm. TPR has issued a Determinations Notice regarding the appointment of an independent trustee of the pension schemes involved.
TPR has separately published a Regulatory Intervention Report in relation to a management buyout in 2013 of an engineering business from its German parent company, which led to the employers being unable to support the pension scheme. The employers went into administration and the scheme entered into an assessment period with the PPF. TPR issued a Contribution Notice (CN) against the former parent company for just over GBP2 million, and reached a settlement of around GBP130,000 with a key individual. This is the first time an additional sum for lost investment returns and interest has been awarded as part of the CN amount.
The Information Commissioner’s Office has published guidance on things organisations should consider about the use of personal information, now that Covid-19 restrictions are relaxing across the UK. The guidance recommends that organisations should review the emergency practices they may have put in place to deal with the pandemic; they should decide if the information being collected is still necessary and ensure their approach is still reasonable, fair and proportionate in the current circumstances.
The next edition of What’s New This Week will be with you on 25 April.