This article was produced by Nabarro LLP, which joined CMS on 1 May 2017.
As ever, April brings a shower of changes for pension schemes. Below are reminders of some of the key developments.
Abolition of contracting-out and the new state pension
Contracting-out of the second state pension is to be abolished from 6 April 2016, to coincide with the introduction of the new state pension. This will increase the national insurance contribution (NIC) liability for employers currently offering a contracted-out scheme (as well as for their employees). This briefing sets out some of the main issues.
New lifetime and annual allowances
Changes to both the lifetime and annual allowances from 6 April 2016 are going to affect many scheme members. Trustees need to understand the new limits, be aware of their obligations and communicate the changes effectively to members. This includes an obligation to provide pension savings statements where an individual has exceeded the annual allowance. This briefing from January looks at the detail.
Retirement risk warnings
From 6 April 2016, trustees of schemes holding "flexible benefits" will be required to issue retirement risk warnings to members before they access their benefits. Retirement risk warnings have been "encouraged" by the Pensions Regulator since flexible benefits were introduced in April 2015 but are now to be made mandatory. This briefing outlines the requirements and includes an updated guide to disclosure.
Automatic enrolment changes
Changes proposed in consultation earlier this year and outlined in this briefing are to be adopted broadly as planned. This includes simplifications to the timing of the provision of information where the staging date is being brought forward and on re-enrolment. There will also be a transitional easement for employers currently using a contracted-out scheme to satisfy their automatic enrolment duties and new exemptions for directors and certain LLP partners.
Ban on member-borne commission in automatic enrolment schemes
New prohibitions on member-borne commission come into force on 6 April 2016. Although this may not have a big impact on current charging practices, there is a notification requirement which will apply to trustees of all schemes where at least some of the benefits provided are money purchase and the scheme is used for the purposes of automatic enrolment. The DWP has issued guidance on the scope of the new requirements. This briefing considers the requirements in more detail.
Ban on active member discounts
From 6 April 2016 trustees will be prohibited from imposing, or permitting to be imposed, charges on non-contributing members which are higher than those which would have been imposed had the member been a contributing (active) member.
The new provision applies only to those members who are active members on or after 6 April 2016 (i.e. are contributing members at that date) and subsequently become non- contributing members.
The ban on active member discounts applies only to money purchase schemes, or schemes where some but not all of the benefits are money purchase, and which are used for automatic enrolment for at least one employee. This could include AVCs (even where they are the only money purchase benefits). SSASs, schemes with only one member and executive schemes are excluded.
The Financial Conduct Authority is introducing similar rules in relation to personal pension schemes, also from 6 April 2016.
Persons of significant influence
From 6 April 2016 unlisted companies (including corporate trustees) will be required to keep a register of individuals who have significant influence or control over the company. From 30 June 2016 this information will also have to be reported to Companies House as part of the confirmation statement (which replaces the existing annual return). This briefing considers the issues.
New PPF entry rules for overseas employers and changes to compensation
New rules aimed at enabling eligible schemes with foreign-based employers to enter the PPF are being introduced. At the same time there will be some changes to the compensation payable from the PPF. This briefing looks at the new provisions.
Despite a relatively quiet budget, there is still plenty to do!