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Pensions Insights May 2022

23 May 2022

In our monthly update, Pensions Insights, we give you our take on the latest highlights in the world of pensions law and policy. If you have any queries about any of the issues covered, or you require advice on a pensions related matter, please do not hesitate to contact your usual contact.

Case Law

Appeal allowed against HMRC revocation of Fixed Protection -  Ian Moan v Revenue & Customs

The First Tier Tribunal has allowed an appeal against HMRC’s decision to revoke an individuals Fixed Protection 2016 as a result of their auto-enrolment in a registered occupational pension scheme established by their new employer.

The case considered whether a valid notice of enrolment was “given” to the individual and whether failure to opt out of a pension scheme within one month of date of an email purporting to give the notice meant the individual had suffered a protection cessation event and accordingly HMRC were entitled to revoke fixed protection 2016.

The individual concerned had various issues with technology and claimed that he did not receive certain emails, nor could he view online payslips which would have alerted him to the pensions deductions being made from his pay.  When he managed to access his payslips and noticed the deductions he asked to be removed from the scheme and for deductions to be refunded but was refused on the basis that he had not opted out of auto-enrolment in the required time period.

However the Tribunal found that the notice given to the individual, whether received by him or not, did not comply with the relevant regulations as it was not given in time and did not contain the correct information.

On the basis that the information in relation to auto-enrolment provided to the individual was incorrect, the Tribunal found that the time period for opting-out of auto-enrolment did not start to run until the correct information had been provided and that therefore the individual had opted-out of the scheme in time.  The appeal against HMRC's action to revoke his fixed protection was therefore allowed.

New Law 

Pension Schemes (Conversion of Guaranteed Minimum Pensions) Act 2022

The Pension Schemes (Conversion of Guaranteed Minimum Pensions) Act 2022 received Royal Assent on 28 April 2022.

The Act amends existing legislation enabling GMP conversion to:

  • Clarify that the legislation applies to survivors as well as earners.
  • Provide for a power to set out in regulations the conditions that must be met in relation to survivors’ benefits.
  • Provide for a power to set out in regulations detail about who must consent to the conversion.
  • Remove the requirement to notify HMRC.

This legislation does not address potential issues for scheme members with Fixed Protection noted in the most recent HMRC supplementary guidance which we reported on in our April Insights.

News

Pensions Dashboards – first staging dates commence on 1 April 2023

The draft Pensions Dashboard Regulations 2022 have now been published and provide for a mandatory staging timetable for pension schemes and their providers to connect to the dashboards infrastructure.

The first staging window will commence on 1 April 2023 and will apply to all personal and stakeholder pension providers with 1,000 or more policies, and master trusts with 20,000 or more deferred and active members. Later staging windows are set out for smaller schemes with the final window commencing 1 October 2025 for relevant schemes with 100-124 deferred and active members.

The Pensions & Lifetime Savings Association ("PLSA") has highlighted actions that schemes should be taking now which include:

  • Identify your scheme's staging date or dates.
  • Familiarise yourself with the new requirements.
  • Plan ahead as to how you will meet the new requirements, including on budget and resource.
  • Meet and discuss with your administrators and providers to understand their plans to connect your scheme to the dashboard infrastructure.
  • Update administration and other relevant contracts to include dashboard connection services.
  • Check to what extent member data is held in appropriate digital format/what is required to make it so.
  • Establish what steps are being taken by administrators/providers to check accuracy of member record data and what elements they plan to compare against any incoming "Find" requests.
  • Ask administrators/providers to report on completeness of pensions income data to meet dashboard data requirements.
  • Consider additional support for members using the dashboard and how that can be provided efficiently; and
  • Consider member communication strategy and adjustment of scheme communications to reflect the availability of the dashboard.

PASA Good Practice Guidance issued - Defined Benefit Transfers: Faster, Safer, Better

This Guidance sets out the principles and suggested simplified approaches for faster, safer and more efficient transfers which comply with regulations. Whilst noting that the proposed processes aren’t prescriptive it is made clear that the following Principles of the Guidance should be followed at all times:

  • The member experience is paramount. Administrators should endeavour to process each step as quickly and accurately as is possible and be mindful of the impact of processing times on member perceptions, quality of outcomes and the administrator’s service reputation.
  • Member communications should be timely, fair, clear, unbiased and straightforward. They should set clear expectations; signpost expected information requirements and provide supporting information where applicable.
  • Members and, where appropriate, other third parties should be kept informed of delays in processing and the reason for the delay.
  • When setting internal timescales for each stage of the process, administrators should be mindful of importance of safety and security. Technology should be used where appropriate to improve efficiency of processes and to enhance the member experience.
  • Working practices should, as far as possible, follow the Guidance and administrators should use the Transfer Template when providing information to member advisers, recognising the vital role the administrator plays in supporting members in making informed decisions.
  • Administrators should work with other third parties as necessary to meet the Objectives and Principles of the Guidance.

The guidance supersedes that issued in 2019 which covered "Standard" transfers and was Part 1 of an intended two-part release as it has been decided to create a Good Practice Code covering all DB transfers.

The guidance includes template notices including one for use as an initial acknowledgement of a transfer request (which is not required where the transfer quote can be provided within one month) to inform the member that their transfer may only proceed if it satisfies one of the two conditions under the Transfer Regulations. 

TPR spot checks for auto-enrolment compliance

TPR has announced that it will be carrying out spot check inspections of employers suspected of failing to meet their workplace pensions duties marking a return to larger scale in-person inspections targeting different areas across the UK, following the lifting of COVID restrictions.

On-site inspections will it seems be carried out across a number of regions and cities throughout the UK in the coming months including Greater Manchester, Nottingham, Greater London and Belfast.

If you have any queries, please get in touch with our UK Pensions team.

Further Reading