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Adviser  >  Technical Central  >  Information & guidance  >  Monthly round-up  >  Technical round-up - October 2008

Technical round-up - October 2008

Announcements

DWP – buying additional years of National Insurance contributions

The government has proposed an amendment to the Pensions Bill to allow people to buy up to an additional six years of voluntary National Insurance contributions, over and above those permitted under the current time limits (currently six years), in order to enjoy a higher state pension.

The measures are intended to enable those with incomplete National Insurance contributions (mostly women and carers) to pay higher voluntary contributions in order to boost their State Pension entitlement. The proposals will apply to those who reach State Pension age between 6 April 2008 and 5 April 2015 and who already have 20 qualifying years on their National Insurance record, taking account of Home Responsibilities Protection.

DWP – enhancement of the Pensions Regulator’s anti-avoidance powers

The Government has amended the Pensions Bill regarding the powers of the Pensions Regulator (TPR) to order contribution notices, financial support directions and restoration orders where scheme changes or corporate transactions (including bulk transfers) could - in the TPR’s opinion - threaten the security of members' pensions.  These are known as the TPR’s anti-avoidance powers.

The amendments include:

• A modified legislative approach – the Government’s intention is to put the changes to the anti-avoidance measures into primary legislation 
• A new alternative test for contribution notices based on material detriment – this new test would enable regulatory intervention where appropriate to address material risks to members’ benefits, with safeguards, including a Regulator Code of Practice and a statutory defence, to guide its application
• Removal of the words ‘otherwise than in good faith’ from the second limb of the existing contribution notice test – this would allow intervention where appropriate, but would be accompanied by a new mandatory requirement on the Regulator to consider the reasonableness of a person’s actions
• A new alternative test for financial support directions – a correction to an anomaly in the insufficiently resourced test without extending the range of this power
• Bulk transfers – a new provision to enable the Regulator to direct a contribution notice or a financial support direction to the transferee scheme, but only where the test(s) for using those powers would have been satisfied had the transfer not happened
• A clarification to the legislation – to make clear that contribution notices can be issued in relation to a series of acts or failures to act, and not simply in respect of single acts.

Guidance

Registered Pension Schemes Manual (RPSM) updated

HMRC has updated many pages of the RPSM and published a list of these on the website with a brief explanation of the change.

The Pensions Regulator

The Pensions Regulator has refreshed the trustee knowledge and understanding (TKU) framework to ensure it remains relevant.A draft revised code of practice and scope guidance has been published for consultation.

The revised code of practice sets out practical guidance for trustees in relation the TKU regime, while the scope guidance provides trustees with a checklist of the topic areas of which they need to have knowledge and understanding.  Both documents support those seeking to meet the trustee knowledge and understanding requirements, introduced by the Pensions Act 2004.

The Pensions Regulator has confirmed that it is issuing a statement to trustees of all work-based pension schemes setting out its general position in relation to current market conditions.

The statement highlights that:

• recent developments in the financial markets will be of great concern to pension scheme trustees, sponsoring employers and scheme members;
• trustees need to remain vigilant and to keep the position of their schemes under review;
• the regulator’s current codes and guidance cover the relevant issues and allow sufficient flexibility for trustees;
• trustees should continue to focus on making sound decisions in the long term interests of scheme members.

Qualifying recognised overseas pension scheme

HMRC has updated their list of qualifying recognised overseas pension schemes.

Rates & Factors

The latest rates are as follow:

Retail Prices Index –  218.4 for September 2008

National Average Earnings Index – 136.6 for August 2008

GAD Interest Rates –  4.75% for November 2008.

Published  13 November 2008

Any research and analysis has been provided by us for our own purposes and the results of it are being made available only incidentally.

The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice.