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Pensions

Pensions Extra

Pensions Bill
The Pensions Bill was introduced during the Queen's Speech earlier this month. The purpose of this bill is to enact the remaining provisions of the pensions reform package set out in the May 2006 White Paper, "Security in retirement: towards a new pensions system". The Bill aims to tackle the problem that many people in the UK are not saving enough for their retirement.  It will provide for a new scheme of personal accounts, whereby eligible workers are automatically enrolled into a pension (although workers will be able to opt out). The Bill is to include powers to introduce mandatory employer contributions and will also enable the Personal Accounts Delivery Authority to move from acting in an advisory capacity to an executive capacity. Although there is not yet a definite timetable for the publication of the bill, the Department of Work and Pensions (DWP) has indicated that the bill may be published before the end of the year.
 
Consultation on dispute resolution
The DWP is currently consulting on draft dispute resolution regulations, with the intention that the new regulations will be laid before Parliament in early 2008 and come into force in April 2008. The intention behind the proposed changes to the law on dispute resolution is for occupational pension schemes to be able to simplify their internal dispute resolution procedures (IDRPs). The proposal is that the current two-stage procedure with strict time limits will be replaced by a more flexible approach. It will be possible for Trustees to keep their two-stage process if they wish, but they will also have the option of choosing to replace it with a single-stage process.
 
A significant aspect of the changes is that instead of being obliged to comply with the current inflexible time limits, trustees will instead be required to issue decisions under the IDRP within a reasonable time. The Pensions Regulator will set out expectations of what is "reasonable" in a Code of Practice. In tandem with the DWP's consultation process on the proposals (responses to reach the DWP by 18 December 2007), the Regulator is also currently consulting on a draft Code of Practice on reasonable periods for dispute resolution (with responses to reach the Regulator by 19 December 2007). 
 
The draft Code of Practice provides that the Regulator expects disputes being considered by trustees or managers to be decided upon and the applicant notified of the decision within four months. The Regulator makes clear that trustees or managers may choose to adopt a procedure with a shorter notification than four months. Although the Regulator has an expectation of a decision and response within four months, the flexibility of the new regime is apparent in that the Regulator recognises that in certain circumstances it may not be possible to complete the procedure within the reasonable periods. In this situation, the Regulator makes it clear that trustees and managers must be satisfied both that the time taken is relevant to the situation and that they have taken appropriate action to try and meet the timescales.
 
Consultation on flexible retirement
The DWP is currently carrying out a further consultation exercise on age discrimination and pensions to consider key issues raised by the pensions industry since the implementation of the age discrimination regulations applicable to pension schemes on 1 December 2006.   The two primary areas of concern are:-
 
  • The interaction between the age regulations and the increasing desire to allow older workers some flexibility in how they work as they approach retirement; and
  • The provision of death benefits beyond a scheme's Normal Pension Age.
 
The DWP acknowledges that the pensions industry and employers have indicated that without further guidance, they are unclear on what may or may not constitute age discriminatory practices. Prior to issuing any further guidance or legislation, however, the DWP is seeking to gain greater understanding of the issues through this consultation process. The DWP is seeking responses from pensions industry professionals and employers setting out examples of existing practices and areas of confusion relating to flexible retirement. Full details are set out on the DWP website and responses should be submitted by 7 December 2007.
 
Transfer Values – delay to reform
Mike O'Brien, Minister for Pensions Reform,announced on 25 October 2007 that the new regulations on the calculation of pension transfer values will come into effect on 1 October 2008. This is a delay in implementation, given that it had previously been announced that the introduction date would be April 2008.   Mr O'Brien has stated that the reason for the delay is that following the consultation on the calculation of transfer values, a number of respondents had requested more time to prepare for the changes. The existing arrangements for calculation of transfer values will remain in force until the new regulations come into force on 1 October 2008.
 
Deadline for submission of PPF valuations
Pension schemes which are eligible for entry to the Pensions Protection Fund (PPF ) and which were registrable schemes prior to 6th April 2007 are reminded that they must submit a PPF valuation by the deadline of 31 March 2008. 
 
Institute of Chartered Accountants of Scotland (ICAS) Guide
ICAS has published a Practical Guide prepared by members of the Institute's Pensions Working Party entitled "Pensions Trustees: Assessing and Managing Risks". ICAS is keen for this publication to be distributed amongst Shepherd and Wedderburn's contacts within the pensions industry. To that end, we are happy to provide a link to this ICAS publication within this edition of our Pensions Extra. We hope you find it informative and useful: 
 
 
If you wish advice on any of the above topics, please contact one of the following Partners:-
Andrew Holehouse
Louisa Knox
Edwin Mustard
 
 
 

 

15/11/2007