Now that the dust has settled a bit on the excitement of the Auto Enrolment announcements of last week, I thought I might just sit down and try to understand a little bit more about what the proposals might actually mean in practice, particularly for small to medium sized businesses. I’m not addressing the really small employers here – those with just a few employees and who previously provided no pension provision. Yes, it’s true that they will for the first time have to look at this, but generally, they will probably just auto enrol into NEST and be done with it.
Posts under ‘Pensions’
It’s coming home to Roost
So, we pretty much now know that Auto Enrolment is going ahead as is NEST. A couple of concessions seem to have been made in that the minimum salary level for AE is rising to £7500 (which is about half the National Minimum Wage) and there will be a 3 month transitional period before AE needs to commence for new employees.
The Price We Pay
Well, the Gods have spoken and we have a slightly better idea (but not by much) on how the Spending Review will impact on pensions. The main point to arise so far concerns the not totally unexpected rise in State Pension Age to 66 by 2020.
This will have a far greater impact on women than men, in that female SPA will rise steeply from 60 to 65 from 2016 to 2018 and then both male and female SPA will rise to 66 by 2020. By the way, there is a highly amusing typo in the Spending Review document at page 69 where the Treasury officials seem unable to spell ‘equalisation’ correctly. Edukashun eh??
Bonfire of the Vanities
Well, what a day it’s been. First, the Government has just annouced the result of its review of the way pension contributions are to be taxed, especially in relation to high earners. The previous administration had proposed an impossibly complicated way of ‘bashing the rich’ which the Coalition immediately on entering office decided to scrap. After the appropriate period of *ahem* consultation they have just announced that the previous £255,000 annual limit on tax relieved contributions is to be reduced to £50,000
Servants may not be Civil…
So, at long last we have Lord Hutton’s interim report on the future of Public Sector Pension Schemes (PSS). We are already hearing the entirely predictable howls from the Unions that they will fight any attempt to take away their cherished (and expensive) Final Salary benefits but maybe, just maybe, we need to have a little reality check here.
Leave them kids alone…
Bad news story of the week is the proposal leaked by the Daily Telegraph today (24 September) that the Pensions and PPF Ombudsman Service is to be merged with the Pension Regulator. As a consequence, the Pensions Advisory Service is to be abolished. This is a seriously bad idea for a number of reasons. Here are just a few.
1. tPR is very nearly unfit for purpose. It makes orders such as Financial Support Directions on Lehman Bros subsidiaries that cannot be enforced in all likelihood. It is seemingly unable to attract and recruit a new Chief Executive or Chairman. It is well past it’s ‘use by’ date and needs a radical rethink.
The people are revolting…
Well back from my holidays and time to catch up with what’s been happening in the wacky world of pensions! The ‘honeymoon’ period of our current Coalition Government seems well and truly over and as we approach Conference season, the militants are flexing their muscles. Despite a new offer to their members, the BBC pension arrangements look set to provoke a strike by members of Unite and BECTU leading to the blacking out of the Conservative Meetfest.
Summertime Blues
Just a short one this week in that I was interviewed by Lexis/Nexis the legal database, for commentary on St Vince of Cable’s plan to simplify legislation by ensuring a One In One Out approach. Here’s a link to the article. Call me an old cynic if you like but sometimes a glass half empty is exactly that. I’m off on my hols now for a couple of weeks. Lying on a beach in the Caribbean with a good friend, good food and a tall glass of something naughty. Now that glass will certainly be half full! See you in September.
Fish and Chips…
I have recently been instructed by a trustee client to assist them in the merger of two pension schemes of the same employer. Great news of course especially for my bank balance, but it immediately started me thinking about possible conflicts of interest. Stay with me here and I’ll explain why.
A little unusually, the two schemes had the majority of the trustees in common. Now most Conflicts guidance, including that of the Pension Regulator tend to concentrate on the possible conflicts that can arise when a senior executive of the Employer also sits as a trustee and that’s fine and dandy but this was a bit different. So what were the trustees to do? Could they effectively and fairly negotiate with themselves when dealing with relative funding positions, future benefits in the merged scheme and the like?
When I’m 64…er 75…
This week some interesting developments on the pension front and in particular the issue of a Consultation document by the Treasury on Compulsory Annuitisation by age 75. As many readers will know, the Government has already announced plans to scrap the Default Retirement Age requirements and so the need to review the requirement to purchase an annuity by age 75 when (in theory) you might still be actively working had to be on the cards.
The current tax rules were drafted on the premise that tax relief is given on the contributions going into a pension scheme on the assumption that tax will be paid on the income (or pension) derived from those contributions – that is on the benefits being paid.
Jennie advises large multi-employer schemes as well as smaller single employer arrangements and has wide experience of both Defined Contribution and Defined Benefit schemes. Jennie qualified in 1986 originally as a criminal prosecutor. She sits as a Magistrate in her local justice area and is an Approved Chairman and Deputy Chair of the Bench Training and Development Committee. Jennie was formerly Legal Director of the Occupational Pensions Regulatory Authority. When her busy practice allows, Jennie likes to indulge her passion for travelling. To consult Jennie on any corporate Pensions matter, please call her on +44 (0)20 7749 2700 or send her an email by clicking below: