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There is seemingly no end to the pensions consultations currently taking place. Three open consultations which you should note are:

  1. the Pensions Regulator’s draft new defined contribution (DC) code of practice;
  2. further minor regulatory changes to address the new pension flexibilities and Pension Protection Fund (PPF) entry issues where a scheme’s sponsoring employer cannot have an insolvency event; and
  3. additional reporting requirements for PAYE operators.

New draft DC code of practice

The Pensions Regulator issued its first DC code of practice in 2013 but has now revised it to bring it up to date, particularly in light of the changes to the law that were brought in earlier this year.

The Regulator states that the new draft code is “shorter and simpler, and sets out the standards of conduct and practice the regulator expects trustee boards to meet in complying with their legal duties, and to deliver better long term outcomes for retirement savers”.

The new code applies to trustees of all occupational DC trust-based pension schemes with two or more members (whether active, deferred or pensioner), including trustees of occupational defined benefit trust-based pension schemes that hold AVCs.

The new code covers the following areas:

  • the trustee board (including specific issues concerning master trusts);
  • scheme management skills;
  • administration;
  • investment governance;
  • value for members; and
  • communicating and reporting.

Consultation on the new draft code opened on 24 November 2015 and will close on 29 January 2016.

Draft legislation [1]

This consultation seeks views on proposed minor and technical regulatory changes to four areas of pensions legislation, to ensure that the new pension flexibilities operate as intended:

  • pension sharing on divorce, including a requirement that, where an attachment order exists, schemes will have to write out to the former spouse at the point the member applies to take their flexible benefits;
  • the final technical changes needed to enable the pension flexibilities to operate in specific situations (for example, where a scheme is winding up);
  • the PPF, including amendments to the Pension Protection Fund (Entry Rules) Regulations around schemes whose sponsoring employer cannot have an insolvency event; and
  • disclosure of information, to place an obligation on trustees of occupational pension schemes to give generic risk warnings to scheme members who wish to take their benefits flexibly.

Consultation on the draft regulations closes on 11 January 2016 with the Department for Work and Pensions planning to bring the legislative amendments into force on 6 April 2016. Once in force, and where applicable, trustees should ensure they comply with the new requirements.

Draft legislation [2] 

Draft legislation has also been issued by (HMRC) which would introduce additional reporting requirements for PAYE operators when making a payment net of PAYE to an employee or pensioner. Under the new requirements pension providers will need to report the following payments:

  • flexible access payments from a DC arrangement – this would catch uncrystallised funds pension lump sums; flexible lifetime annuities; payments from a member’s flexi-access drawdown fund etc.; and
  • any authorised lump-sum death benefits that are taxed as income with effect from 6 April 2016 – this would catch lump sum death benefit payments made to individuals where the member was over age 75 when he died or where the member was below age 75 but the lump sum was paid outside of the 2-year timeframe.

Comments on the draft regulations should be submitted by 8 January 2016 with the intention being that the draft regulations would come into force on 6 April 2016 and would have effect in relation to payments made on or after that date. Trustees should note these proposed new reporting requirements and ensure they are complied with once in force.

This post was contributed by Kate Lloyd. For more information, email blogs@gateleyplc.com.

[1]Occupational and Personal Pension Schemes Miscellaneous Amendments Regulations 2016

[2] Income Tax (Pay As You Earn) (Amendment) Regulations 2016


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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.