Pensions: what’s new this week April 2022 # 2 | Allen & Overy LLP

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 such as: the new HMRC GMP equalization guidelines; future changes to the PPF; PLSA and ABI campaign to boost pension engagement; application of the TPR; Data protection guidance on easing Covid-19 restrictions.

  • New HMRC GMP Equalization Guidelines
  • Future PPF Changes
  • PLSA and ABI campaign to boost pension engagement
  • TPR app
  • Data Protection Guidance on Easing Covid-19 Restrictions

New HMRC GMP Equalization Guidelines

HMRC has published a new GMP Equalization Information Bulletin (GMPE), with advice on top-up payments to correct previous transfers that did not take into account GMPE (as a top-up transfer or lump sum); and GMP conversion.

The guide includes helpful clarifications on areas that have caused dieting problems. For example, it confirms that, for most members, the payment of a transfer top-up or lump sum payment will not affect the additional annual allocation (as explained in previous guidance). It confirms that previous bulk transfers are not invalidated by a new GMPE payment. It also confirms a generous interpretation of the deadlines for making a lump sum payment following a “relevant increase” (this tax rule allows lump sum payments of up to GBP 10,000 when certain conditions are met). This may make it easier for schemes to use these lump sums to settle GMPE liabilities, although HMRC has also said the relevant accretionary track cannot be used where the initial transfer took place before April 6. 2006.

On conversion, the guidelines say HMRC is still considering this “complex area” and the potential need for legislative change. It clarifies certain points, including the expected tax position for current retirees, those retiring shortly, and members who left pensionable service before April 6, 2006.

Read the newsletter.

Future PPF Changes

The Pension Protection Fund (PPF) has published its three-year strategic plans and business plans, confirming its strategic priorities from 2022 to 2025. Points of practical interest for the schemes include the following:

  • the PPF will seek to further simplify the way it calculates the PPF levy in the future, ensuring value for money;
  • the implementation of changes following the Hampshire and Hughes the cases (which concluded that the PPF compensation cap was illegal) will be closed;
  • the PPF will work with the DWP to agree an approach for the implementation of 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 program of continuous improvements to the Dun & Bradstreet web portal that taxpayers use to view insolvency risk scores.

Read the strategic plan and the business plan.

PLSA and ABI campaign to boost pension engagement

The Pensions and Lifetime Savings Association (PLSA) and the Association of British Insurers (ABI) have launched a campaign to improve people’s understanding and commitment to their pensions. The campaign will run through the fall and winter of this year via social media and a variety of pension plan digital and print communications. The resources will be widely promoted and made freely available to anyone interested in participating in the pensions industry, including employers, regulators and government departments.

Read more.

TPR app

The former owner of Norton Motorcycles was given an eight-month suspended prison sentence on 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 (TPR) costs of £20,716. The charges relate to three defined contribution plans of which the person was the sole trustee; more than 5% of the value of each scheme’s assets was invested in its business, in violation of the ERI restriction.

The Pensions Ombudsman (TPO) has previously upheld complaints from scheme members regarding various actions of the former owner/trustee, and also ordered him to make a payment to return funds paid in breach of trust. TPO referred the ERI issue to TPR, which pursued a criminal conviction. The judge considered an early guilty plea, but also the damage done to members’ mental well-being and confidence in retirement savings, as well as financial harm. TPR has issued a notice of determination regarding the appointment of an independent trustee of the affected pension plans.

TPR separately released a regulatory intervention report regarding the 2013 management buyout of an engineering company from its German parent company, which prevented employers from supporting the pension plan. The employers went into administration and the plan entered the evaluation period with the PPF. TPR issued a Notice of Contribution (NOC) against the former parent company for just over £2million and reached a settlement of around £130,000 with a key person. This is the first time an additional sum for investment returns and lost interest has been awarded as part of the CN amount.

Learn more about Norton motorcycles and read TPR’s regulatory intervention report.

Data Protection Guidance on Easing Covid-19 Restrictions

The Information Commissioner’s Office has released guidance on what organizations should consider about the use of personal information now that Covid-19 restrictions are easing across the UK. The guidelines recommend that organizations review any emergency practices they may have put in place to deal with the pandemic; they must decide whether the information collected is still necessary and ensure that their approach is still reasonable, fair and proportionate in the current circumstances.

Read the tips.

Next edition

The next edition of What’s Up This Week will be with you on April 25.

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