Pensions: What's new this week - 7 September 2020

Normal minimum pension age to rise to 57 by 2028

As part of the ‘freedom and choice’ reforms in July 2014, the government announced that the earliest age at which most individuals can normally take their private pension savings under the tax rules will increase from age 55 to 57 by 2028, alongside the increase in the State Pension Age (SPA) to age 67. It will then increase in line with the SPA, pegged at ten years below it.

In a statement to Parliament this week, the government has confirmed that it still intends to make this change and will legislate for it in due course.

TPR: single code of practice consultation

The Pensions Regulator (TPR) is preparing to consult on a new single code of practice, which is intended to make its expectations quicker to find, use and update. TPR has now announced that it is planning to launch the consultation in late 2020 or early 2021, and will focus initially on internal controls and DC content (including content relating to public service schemes and master trusts). This focus covers governance aspects that are relevant to the implementation of requirements stemming from the IORP2 Directive. Regulations are already in place which require schemes to have an ‘effective system of governance’ (proportionate to the size, nature, scale and complexity of the scheme), and require TPR to issue a code of practice setting out its expectations in this and other areas. As noted last week (see WNTW, 1 September 2020), to the extent that these requirements cover ESG content, the government has suggested that compliance with proposed TCFD reporting duties might be deemed to fulfil those elements.

Parry: HMRC updates IHT manual

HMRC has updated its Inheritance Tax Manual following the recent decision by the Supreme Court in the Parry case. As a reminder, this was a long-running dispute over the application of inheritance tax charges where a member had transferred to a personal pension plan shortly before her death, and had not taken benefits (for more details, see WNTW, 24 August 2020). HMRC’s new guidance underlines that although the Parry transfer did not trigger a tax charge, this will not always be the case.

Transfers made in the two years prior to a death must be reported on inheritance tax form 409. HMRC has not changed its existing guidance that in general where transfers are made more than two years before a death, it can be assumed that the member was in normal health (unless there is evidence to the contrary) and there is no transfer of value. However, if a member is in ill-health at the date of a transfer (whether more or less than two years before death) then inheritance tax may still be charged on transfers in appropriate cases.

Pensions dashboards: data standards

The Pensions Dashboard Programme has published a blog post on recent work on data standards for dashboards, including its recent call for input. It aims to publish a summary of the responses to the call for input this autumn and, by the end of the year, an initial version of data standards.