The Approach of Autumn - UK pensions agenda
Key dates for your diary and pension action plans
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations came into force on 26th June 2017. For the first time trustees of a private sector pension scheme will be subject to the requirements of the anti-money laundering regime. The new regulations require trustees to maintain accurate and up to date written records of all beneficial owners of the trust. This will include the principal employer (and possibly any participating employer), the trustees and beneficiaries. Trustees will also be required to register with HMRC and provide details of the scheme and its “beneficial owners” on or before 31 January 2018.
The new EU General Data Protection Regulation will apply from 25 May 2018 and will introduce a number of changes to current data protection rights and duties. Consent requirements will change, information requirements will increase and individuals will gain new rights. Don’t underestimate the work required to comply with the new requirements. Trustees now need to carry out an information audit, to determine who holds what data, where it is located and why it is processed. Consideration should be given to whether changes are required to current data processing agreements and whether changes are required to the process of obtaining member consent to data processing. Visit our GDPR and the UK Data Protection Bill article.
Auto-enrolment transitional periods
The transitional period for paying minimum contributions of 2% to a DC auto-enrolment pension scheme (with at least 1% coming from the employer) will expire on 5 April 2018. The second transitional period for paying minimum contributions of 5% (with at least 2% coming from the employer) will expire on 5 April 2019. The transitional period for DB schemes, which allowed auto-enrolment to be deferred for active members, expired on 30 September 2017.
Money purchase annual allowance
Due to the timing of the General Election, the Government dropped provisions from the Finance Bill 2017 which would have reduced the money purchase allowance from £10,000 to £4,000 (in respect of members who have flexibly accessed DC benefits). These provisions reducing the money purchase allowance and other changes have now been re-introduced in the Finance Bill (No 2) 2017, which will likely receive Royal Assent in autumn 2017 and have retrospective effect to 6 April 2017 as originally announced.
Public sector exit payments an update
Repayment/claw back provisions contained in the Small Business, Enterprise and Employment Act 2015, enable the repayment of some or all of the exit payment made to high earning employees if they return to work in the public sector within 12 months of departure. The Act came into force on 1 January 2016, and a draft set of Regulations were published by the Government as part of a consultation exercise carried out between December 2015 and January 2016. The Regulations were intended to come into force in April 2016. Nearly 18 months later, no formal response to the consultation has been published and no indication has been given as to when these Regulations can be expected to be laid before Parliament.
Payment Cap of £95K - Draft Regulations setting out details of the cap were published on 3 November 2015 but have not yet been brought into force. They were initially expected to come into force in October 2016. The power to make regulations capping public sector exit payments to a maximum of £95k came into force on 1 February 2017, but the Government has given no indication of when these Regulations can be expected to be laid before Parliament.
Early exit charges
Further limits are being introduced to the charges that can be imposed on DC funds. From 1 October 2017 there will be a 1% cap on early exit charges for members with flexible benefits who joined the pension plan before 1 October 2017, and a complete ban on exit charges for new members who join from this date. In addition, the ban on member-borne commission payments to advisers will be extended so that adviser costs can not be recouped from members in respect of agreements entered into before 6 April 2016.
The transitional period for current VAT practices (during which employers can continue to operate the 70% / 30% split) will come to an end on 31 December 2017 unless it is further extended by HMRC. On single invoices rendered to an employer’s occupational pension scheme in respect of third party investment, amendment and administration costs, the employer can currently recover VAT on 30%. This practice will cease when the transitional period comes to an end.