1

Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

Pensions Related News etc. to 3 February 2016 The following is a summary of points of interest relating to pensions in general of the last week or so.

This document includes a short multiple choice set of questions at the end, so you can use this as a

part of your CPD.

Prudential: Retirement incomes hit post-financial crisis high Prudential has published the initial findings from the tenth year of its Class of 2017 research. According

to the research, this year's retirees (the Class of 2017) are expecting to live on an average annual

income of £18,100. This figure is £400 more than the expected income of those who stopped work in

2016 and after a fourth consecutive annual increase is now at its highest level since 2008.

Other findings of the prudential report, include:

But the income expected by people retiring this year is still £600 lower than the 2008 peak.

Nearly half of the Class of 2017 feel they are either not financially well-prepared for retirement

or are unsure about their preparations.

Sir Philip Green and TPR could be called back to face MPs over BHS pension deal According to press reports (The Daily Telegraph of 29 January 2017 and The Times of 30 January 2017)

Sir Philip Green and TPR Chief Executive Lesley Titcomb are likely to have to appear before MPs again

to justify any agreement they reach on the BHS pension scheme deficit. Sources believe a deal that

would see Sir Philip pay £350m to fund the pensions of former BHS employees could be signed as early

as this week. Commenting on the rumours of a possible deal, Frank Field, Chairman of the Work and

Pensions Committee, said: “The key test is whether pensioners and future pensioners will get from

this deal the pensions they expected before Sir Philip took ownership of BHS. The committee will be

very pleased if there is a deal but will carefully analyse it to assess whether existing and future

pensioners have been disadvantaged, and we may well call Sir Philip and The Pensions Regulator back

to give evidence if the deal is unsatisfactory in this regard.”

Tata Steel workers to vote from today on pensions deal According to press reports (BBC News Online of 30 January 2017) thousands of workers will be balloted

from today on plans to rescue the Port Talbot steelworks, which include closing the British Steel

Pension Scheme to future accrual and replacing it with a DC arrangement with maximum contributions

of 10% from Tata and 6% from employees. It has also emerged that a one-off pension payment of

£10,000 could be made to Tata employees in their 50s who plan to take early retirement. Community,

GMB and Unite union members will take part in the ballot with the result expected by the middle of

February.

Annual National Minimum Wage Increase The draft of the National Minimum Wage (Amendment) Regulations 2017 have been published,

intended to come into force on 1 April 2017. These will raise the national living wage (for those aged

over 25) from £7.20 p/h to £7.50 p/h, with associated increases for the other age bands.

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Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

Restriction on public sector exit payments Section 41 of the Enterprise Act 2016 comes into force on 1 February 2017 which caps public sector

exit payments at £95,000. The Enterprise Act 2016 (Commencement No. 2) Regulations 2017 (SI

2017/70) became effective on February 2017. These regulations apply to all four nations of the UK.

The regulations restrict exit payments payable to employees of prescribed public sector authorities or

holders of prescribed public sector offices as a consequence of them leaving employment or office to

a maximum value of £95,000.

An exit payment for the purposes of these regulations is a payment of a prescribed description which

includes any payment:

on account of dismissal by reason of redundancy

on voluntary exit

to reduce or eliminate an actuarial reduction to a pension on early retirement or in respect of

the cost to a pension scheme of such a reduction not being made

ex gratia

in respect of an outstanding entitlement

of compensation under the terms of a contract;

in lieu of notice

in the form of shares or share options.

Concerns over BT pension deficit puts Openreach deal at risk According to a report in The Times (thetimes.co.uk of 31 January 2017), the future of Openreach is in

doubt due to concerns over the size of BT's pension scheme deficit. TPR is seeking assurances from

Ofcom about its plans to force the legal separation of BT Openreach and is demanding clarity over the

implications of the proposal for over 302,000 BT pensioners who rely on the pension scheme.

Independent Pension Consultant John Ralfe predicts that BT's huge pension shortfall will have

increased to around £10bn when it is formally valued for the first time in three years in June. Ofcom

said: “Our plans for Openreach would mean BT continues to have access to the cash it generates. Our

expert advisers have identified measures to reduce any effects on the pension. Separately, we've

engaged at an early stage with The Pensions Regulator and other government bodies to explain our

plans, which we are now preparing to take to the European Commission.”

Phoenix Group: Pension cold calling is on the rise Phoenix Group has published a Press Release summarising research it undertook in September 2015.

The highlights of this research includes:

A quarter (26%) of UK adults have received a contact such as a cold call about their pension –

two thirds of these have been contacted in the last six months

Three fifths (59%) said they were approached via a telephone call, 25% via email and 20% via

letter with some receiving more than one form of communication

7% have released some or all of their pension as cash as a result of this contact

Three fifths (61%) wouldn’t report pensions cold calls, primarily as they didn’t know they

could.

3

Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

Aviva: Financial jargon leaves consumers confused and out of pocket Aviva has published a Press Release setting out research it undertook in October 2016. According to

this research, fewer than one in four people can correctly define a DC pension, income drawdown or

an enhanced annuity. Some of the main findings include:

41% of UK adults have ignored information given to them by financial providers because they

do not understand the terms used in them.

Two in five (41%) ignore financial information because they don’t understand the terms used,

with 13% of these losing money as a result.

43% of UK adults know the capital of Peru while 26% can explain football’s offside rule – yet

less than a quarter (22%) say they know what a defined contribution pension is.

A third (30%) of homeowners think home insurance covers ‘anything that happens in their

home’.

Survey finds more than half of baby boomers have never increased workplace pension contributions According to a report in employeebenefits.co.uk 31 January 2017 research by Chase de Vere has found

that 58% of baby boomers who are members of a workplace pension scheme have never increased

their pension contributions, while 63% have not made any alterations to the funds in which their

pension savings are invested. The survey of 500 private sector employees aged between 51 and 70

also revealed that 34% of respondents are worried that they will not have enough income to live on

in retirement and 46% of those surveyed believe they will only have enough income to live adequately.

ONS publishes changes to DC pension fund estimates in the National Accounts The Office for National Statistics (ONS) has published The UK Enhanced Financial Accounts: changes

to defined contribution pension fund estimates in the National Accounts; part 2 - the data. This sets

out new estimates for household entitlements in DC pension funds, which is part of the UK National

Accounts series AF.63 within AF.6M in Table 6.1.9. It will also look at the impact of the new estimates

on D.6141 (household social contribution supplements).

ROPS List Updated On 1 February, HMRC published its updated its list of schemes that have informed them that they

meet the conditions to be a Recognised Overseas Pension Scheme (ROPS). This list only contains

pension schemes that have told HMRC have asked to be included on the list. There is now a total of

1,275 schemes listed, from 40 countries, a net increase of 16 schemes. 21 schemes have been added

to the list (eleven of these from Australia) and five schemes have been removed from the list. HMRC

has announced that the ROPS list will not be updated after April 2017.

Aegon Retirement Readiness Survey 2016 published According to the recently published Aegon Retirement Readiness Survey 2016, 69% of self-employed

people envisage a flexible transition into retirement. Among the respondents, 33% of sole proprietors

expect to retire at the age of 70 or older or never retire, compared to 21% of self-employed with

employees and 18% of employed workers.

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Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

“Pensions and Chocolate” In the recently published first annual report entitled “Pensions and chocolate. The state of pensions

regulation in 2017”, jointly prepared by Pinsent Masons, The Pensions Institute and Pendragon, the

comparison is drawn by the authors that there is a similarity between pensions and chocolate! The

report states that “rather like chocolate, while rules might indeed be a good thing, too much might be

bad for us; and the field is replete with instances indicating the limits to, and anomalies of, regulation.

Whilst the regulator fines decent trustees for failing to sign forms, it is unable to do anything other

than issue brochures in relation to the tens, if not hundreds, of millions being stolen through pensions

liberation.”

The main findings of the report include:

The DWP Select Committee has called for more pensions legislation, but there is no evidence

that such legislation is needed for member protection.

Current intervention levels by the Pensions Regulator are adding to unnecessary costs for

many schemes. At the same time, the Regulator seems to be offering constructive assistance

in a few cases. It is clear the role of the Regulator needs to be rethought and perhaps

diminished.

The complexity of the legislative and regulatory system is creating more disputes than

necessary. At the same time, the Courts are moving towards more pragmatic and cost-

effective solutions.

The 160,000 pages of pensions regulation need to be radically cut back, and there should be

a codification exercise.

Government and regulators should jointly set a stable and long-term policy for pensions

regulation and avoid incessant tinkering, which is causing immense damage to people’s

pension expectations.

ACA Smaller Firms' Pensions Survey The Final Report of the 2016/17 ACA Smaller Firms' Pensions Survey looks at auto-enrolment in small

companies with fewer than 250 employees. The report reveals that 57% of smallest employers (those

employing fewer than ten workers) say that auto-enrolment is 'very complex', while 36-40% of

employees at smallest employers are typically ineligible for auto-enrolment.

Experts warn that tens of thousands may have paid the wrong tax on pension withdrawals According to a report in The Daily Telegraph (telegraph.co.uk of 31 January 2017) experts have raised

concerns that tens of thousands of pension savers may have paid incorrect tax on pension withdrawals

made under the pension freedoms. The reforms, introduced from April 2015, allowed savers to

withdraw money from their pension pot and have been used by at least 232,000 pension savers.

However, accountants have warned that when withdrawals were made, pension providers deducted

tax according to the tax code supplied by HMRC, but this tax code was often incorrect. Nimesh Shah,

from accountancy firm Blick Rothenburg, said: “It's a real issue. Pension companies didn't know what

marginal rate of tax the individual should have been paying. They were relying on information from

HMRC, but very often this wasn't correct, because someone's income could be very different one year

to the next.”

5

Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

It is perhaps worth pointing out HMRC’s guidance to scheme administrators where pensions are

accessed flexibly for the first time:

1. If you hold a PAYE code, this should be operated on a “month 1” basis

2. If you do not hold a PAYE operate an “emergency tax code on a month 1” basis

3. If you are paying a commutation lump sum or a small posts lump sum operate code “BR”.

In the first two instances, it is likely income tax will have been overpaid if only a single payment is

taken in the tax year, if regular payments are being set up, the overpayment should be corrected over

the tax year.

In the last instance, it is more likely that the individual will end up owing tax from this one payment.

Hymans Robertson Trustee Barometer published Hymans Robertson's annual Trustee Barometer this year entitled “Adapting to an uncertain world”.

This has revealed that only 1% of trustees look at the probability of paying their members' pensions

as a key measure. The survey also found that 57% of trustees said that having a fully integrated

approach to funding remains one of the biggest challenges.

Governance tops the agenda for employers when selecting a Master Trust In a recent Press Release, Aon Hewitt has summarised the findings of a survey into auto enrolment.

Aon Hewitt says that the majority of employers view good governance as the key attribute of a Master

Trust. The second most important attribute cited was the ability to consolidate legacy plans features

with 40% of the respondents highlighting this as key.

Companies could shave £230bn off pension deficits by refining approach to life expectancy projections According to a Press Release from PWC, the results from their Skyval Index have revealed that the

deficit of the UK's DB pension funds stood at £470bn at the end of January 2017. Of this, £230bn

relates to potential life expectancy improvements a long way into the future and does not need to be

pre-funded over the next decade.

JLT Employee Benefits publishes white paper on how DB costs could be reduced According to the latest JLT Employee Benefits white paper, consolidating DB pension schemes could

cut employers' costs by £500m per annum collectively. John Wilson, Head of Technical, JLT Employee

Benefits, commented: “With the prospect of millennials being the first generation to have worse

pensions than their parents, the chance to try and escape this pensions ‘black hole’ and to address the

intergenerational unfairness of legacy DB pension schemes is an opportunity not to be missed.

Therefore, all stakeholders, including employers, trustees, members, policy makers and the pensions

industry, should act together and explore the options for achieving a lasting DB settlement.”

6

Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

NAO publishes findings of investigation into police and firefighters’ pension scheme commutation factors The National Audit Office (NAO) has published the findings from its investigation into the

compensation paid by the Government to members of the Police and Firefighters’ Pension Schemes

who retired between 2001 and 2006 without receiving their full pension entitlement. The NAO began

its investigation after The Pensions Ombudsman upheld a test case brought by Mr Milne in May 2015.

The NAO's investigation found that the Government failed to provide appropriately valued pension

lump sums for an estimated 34,000 police and firefighters in the 2001 to 2006 period and that the

Government was aware in 2006 that the commutation factors used to calculate police and firefighters’

pension lump sums did not reflect the life expectancy of pensioners or the underlying trends across

pension schemes.

Draft legislation: deemed domicile - Income Tax, Capital Gains Tax and Inheritance Tax Draft legislation has been published which amends the rules for certain non-domiciled individuals so

they will be treated as domiciled in the UK for the purposes of Income Tax, Capital Gains Tax and

Inheritance Tax from the 2017 to 2018 tax year.

As previously announced, from April 2017, non-domiciled individuals will be deemed UK-domiciled for

tax purposes if they have been UK resident for 15 of the past 20 years, or if they were born in the UK

with a UK domicile of origin. Non-domiciled individuals who have a non-UK resident trust set up before

they become deemed-domiciled in the UK will not be taxed on income and gains arising outside the

UK and retained in the trust.

To close a loophole, from April 2017, inheritance tax will be charged on UK residential property when

it is held indirectly by a non-domiciled individual through an offshore structure, such as a company or

a trust.

The government will change the rules for the Business Investment Relief (BIR) scheme from April 2017

to make it easier for non-domiciled individuals who are taxed on the remittance basis to bring offshore

money into the UK for the purpose of investing in UK businesses.

In summary, the main changes are:

Inheritance Tax (IHT) will be charged on UK residential property held through offshore

companies. Valuations will take debts and the company’s net value into account.

The remittance basis of taxation will cease to be available to individuals who have been UK

tax resident in 15 of the previous 20 UK tax years and have so become "deemed-domiciled":

this will impact on individuals from the start of their sixteenth tax year in the UK.

The government will make changes to its proposals so that “deemed-domiciled” status for IHT

purposes will cease after four consecutive tax years of non-UK residence, effectively keeping

the current 'IHT shadow’ treatment. However, individuals will still need to remain non-UK

resident for six complete UK tax years to re-start the clock in the event they decide to return

to the UK.

Individuals who become “deemed-domiciled” for income tax and CGT purposes on 6 April

2017 will be able to re-base their non-UK assets' values at that date if they have previously

paid the remittance basis charge at least once since 2008. They will also enjoy the ability to

make tax-free remittances of any gains realised on disposals of such non-UK assets after 5

April 2017 to the extent such gains are attributable to the pre-April 2017 period.

7

Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

There will be an ‘amnesty’ on segregating mixed funds during the 2017/18 tax year, allowing

more tax-efficient remittances for remittance basis users in the future.

Pre- “deemed-domiciled” trusts will be afforded “excluded property” status for IHT. In

addition, their settlors will benefit from protections from attribution rules for CGT and Income

Tax, provided conditions are met: these trusts will therefore be useful ‘freezers’ for settlors

and families who do not intend to access trust funds whilst resident in the UK.

HMRC Publish Pensions Schemes Newsletter #84 HMRC has published Pension Schemes Newsletter 84, which covers the following topics:

1. Pension flexibility statistics.

a. HMRC summarises the details published on 25 January, covered in the previous issue

of Pension News.

2. Lump sum death benefits; information requirements.

a. Setting out information for scheme administrators when paying lump sum death

benefits to a trust.

3. Annual allowance calculator update.

a. Confirms that the HMRC annual allowance calculator is no longer in a beta format,

although the admit they are still reviewing and updating the calculator.

4. Qualifying recognised overseas pension schemes (QROPS) online.

a. HMRC has confirmed that they will cease publishing the ROPS list from April 2017.

5. Drawdown pension tables.

a. HMRC has updated the new capped drawdown tables. HMRC has also stated that the

new tables will apply from 1 July 2017, and not 6 April as originally stated. Please refer

to the article in the issue of Pension News of 20 January 2017.

6. Relief at Source.

a. HMRC sets out the requirements on scheme administrators for completing relief at

source returns.

7. Lifetime allowance.

a. HMRC reminds readers that the deadline for making elections for individual

protection 2014 is 5 April 2017. They also provide a link for scheme administrators to

look up member’s transitional protection elections.

MetLife publishes research on realities of pension freedom MetLife's latest research into the realities of pension freedom states that savers, pensioners and

advisers value guarantees and calls for a wider range of options and support for consumers faced with

a choice between low-rate and inflexible annuities, or flexible but risky drawdown.

DWP publishes policy paper encouraging businesses to retain older workers The DWP has published a policy paper entitled “Fuller Working Lives: a partnership approach” which

encourages businesses to retain, retrain and recruit older workers. The policy paper puts forward

recommendations around flexible working, retraining for a new career, self-employment,

volunteering and phased retirement.

The DWP has also published “Fuller Working Lives: evidence base 2017” which provides background

evidence for the policy paper.

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Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

TUC urges ministers to ensure adequate retirement provision for all generations In a Press Release the TUC has announced the publication of its paper entitled “Talkin’ ‘bout my

generation” which suggests that changes to the labour market, not pensions for older workers, have

seen young people suffer from falling pay, rising insecurity and poor retirement provision. The report

urges ministers to guarantee increased pension provision for everyone rather than concentrating on

the distribution of inadequate retirement savings between different generations. Speaking ahead of

yesterday's TUC annual pension conference, Assistant General Secretary Paul Nowak said: “Many

young workers are unable to save for a pension because they’re stuck in low-paid, insecure work. But

we are not going to fix this problem by pitting them against older people. Let’s not forget that 1.5

million pensioners live in poverty - and most of them are women. All generations deserve fair pay

during their working lives and a decent standard of living in retirement. We must focus on the wider

causes of inequality to improve pensions across the board.”

Last Chance Saloon: The New "Requirement to Correct" Offshore Tax Matters If a client’s affairs involve income or assets outside the UK and their UK tax filings up to 5 April 2017

in relation to these offshore matters are not 100% perfect then, from 30 September 2018, they will

face stringent new penalties of up to 200% of the tax due. In the most serious cases the penalty can

increase to 300%, together with a further penalty of 10% of the assets in question and potential

naming and shaming by HMRC. They have until 30 September 2018 to ensure all reporting is correct.

Advisers should start reviewing their clients now. Additionally, advisers should remember they can be

fined, if HMRC find an individual who is a client (including post 1 September 2016 former clients) of

an adviser, who has not been issued with the required “HMRC Notification letter”. As an adviser, they

can be fined £3,000 if they are unable to prove they issued the client with the required letter. See our

Pensions Related News of 20 January 2017.

TPR publishes automatic enrolment compliance and enforcement report The quarterly update from the Pensions Regulator (TPR) on the compliance and enforcement of

automatic enrolment reveals that there were 13,130 cases closed between 1 October and 31

December 2016, bringing the total number of cases closed since the start of automatic enrolment to

33,180.

Employers - don't risk your credit rating In the latest Quarterly Compliance and Enforcement Bulletin issued by the Pensions Regulator (TPR)

there were details that a number of employers have now been handed County Court Judgements (CCJ)

after failing to pay their automatic enrolment fines. This can happen when employers persistently

ignore penalty notices sent to them by TPR. Employers that fail to pay within 30 days of receiving the

CCJ, will have the details entered on their credit record.

The report has the example of a South London removals firm who took nearly two years to comply

with their automatic enrolment duties, despite receiving two Fixed Penalty Notices (FPNs) and an

Escalating Penalty Notice (EPN). It was only when TPR applied for a CCJ that the employer became

compliant and paid their fines.

Charles Counsell, Automatic Enrolment Executive Director said:

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Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

“A CCJ goes onto an employer’s credit record and remains there for six years, seriously affecting their

ability to borrow money for their business in the future. Burying your head in the sand and ignoring

your legal duties means your staff are missing out on pensions they are entitled to and your credit

rating and reputation could be hit.”

The report flags the hospitality sector as an area at higher risk of non-compliance. The sector, which

includes hotels, pubs and bars, has received a higher percentage of fines. This is an area which typically

includes a large proportion of employees on non-standard contracts, which in part explains the higher

proportion of non-compliance.

Small employers can become non-compliant because they are more likely to leave things to the last

minute but in most cases the nudge of a compliance notice is enough to get them back on track.

Savers missing out by using cash as long-term investment strategy Royal London has recently published its tenth policy paper “The Curse of Long Term Cash”, savers have

missed out on over £100bn in returns by using cash as a long-term investment strategy. The paper

shows that if the £250bn currently held in Cash ISAs was invested in a multi-asset fund it could now

be worth around £360bn.

TPR publishes blog on auto-enrolment The Pensions Regulator (TPR) has published a blog discussing the roll-out of auto-enrolment which

was accompanied by “doom-laden prophesies” that have not come true. However, the blog, written

by TPR's Automatic Enrolment Executive Director Charles Counsell, says: “Success does not build

complacency and I know that new and even greater challenges lie ahead.” Mr Counsell also comments

on TPR's latest figures which show that a small number of employers who fail to carry out their auto-

enrolment duties are facing investigation and penalties (see Perspective News: Thursday 2 February

2016). The blog concludes: “The news of fines may grab the headlines, but the real story today is the

thousands of employers who have navigated their AE journey and many more preparing to do so in

the coming months.”

Labour: A better deal for savers - Helping ordinary workers secure decent living standards in retirement In a recent Press Release from the Labour party, Debbie Abrahams, the Shadow Work and Pensions

Secretary, has described the current transparency requirements for pension schemes as “shocking”

and has called on the Government to impose strict disclosure requirements for trust-based pension

schemes that replicate those imposed by the FCA on asset managers. Speaking at the TUC's pension

conference this week, Ms Abrahams said: “On costs and charges it is a shocking state of affairs in this

country that no one - no one - can find out how much it costs to run a pension fund.... I believe firmly

in the principle of simplicity. Everyone contributing to a pension scheme should have a set of

transparent and understandable rules, and we should have access to transparent data.”

Research finds poor understanding leaves pension scheme members at risk In a recent Press Release Xafinity has revealed that pension scheme members are being left at risk by

poor understanding. When asked whether they understood what pension they would get from their

scheme, 25% of respondents said yes, 34% said no and 41% said that they had some understanding.

10

Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

Response to pensions advice allowance consultation published HM Treasury has published its response to the consultation on Introducing a Pensions Advice

Allowance. The main point worthy of pension is that whilst many comments in the press have focussed

on the Pensions Advice Allowance being £1,500. However, the actual allowance £500, and an

individual can utilise the allowance up to three times, but only once in any tax year. That is where the

£1,500 came from.

House of Commons Library briefing papers These are documents published by the House of Commons or Parliamentary Library designed to give

an overview of Government policy to MPs and Peers. They normally contain a brief history of how we

got to where we are and some of the background comments made in the Chamber, in committee

stages as well as in written answers. They can be useful in gaining a wider understanding of certain

policies.

The following have recently been published:

The Pensions Regulator: Powers to protect pension benefits

This considers the Pensions Regulator's powers to protect pension scheme benefits.

The Pensions Regulator (TPR) has powers to act where it believes an employer is deliberately attempting to avoid their pension obligations, leaving the Pension Protection Fund to pick up their pension liabilities. To protect scheme benefits and reduce the exposure of the PPF to claims for compensation, it can issue any of the following;

Contribution notices. These allow us to direct that, where there is a deliberate attempt to avoid a statutory debt, those involved must pay an amount up to the full statutory debt either to the scheme or to the board of the Pension Protection Fund.

Financial support directions. These require financial support to be put in place for an underfunded scheme where we conclude that the sponsoring employer is either a service company or is insufficiently resourced.

Restoration orders. If there has been a transaction at an undervalue involving the scheme's assets, these allow us to take action to have the assets (or their equivalent value) restored to the scheme.

A clearance procedure is available for anyone who wishes to confirm that they will not be subject to either a contribution notice or a financial support direction following a business transaction.

In its December 2016 report on DB schemes, the Work and Pensions Select Committee recommended that TPR should be reformed to a “nimbler, more proactive regulator” able to intervene sooner when difficulties become apparent. Recommendations included that:

[…] the Government should consult on new rules for situations where TPR clearance of major corporate transactions is mandatory rather than voluntary, allowing the TPR to decide if a particular proposed corporate change could damage a pension scheme. (Press release, 21 December 2016).

On 30 January, Work and Pensions Secretary Damian Green said the Government was “about to produce a wider consultation on defined benefit schemes” (HC Deb 30 January 2017 c754).

This note looks at the rationale for the introduction of these ‘anti-avoidance’ powers and at how they have been used in practice.

MCQ 1

Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

MCQs: The following multiple choice questions relate to the above Pensions Related News document.

Question 1 The new HMRC capped drawdown tables are to be used from:

A) 1 April 2017

B) 6 April 2017

C) 1 July 2017

D) 1 September 2017

Question 2 According to research from Prudential this year's retirees (the Class of 2017) are expecting to live on an average annual income of £18,100:

A) £12,100

B) £15,100

C) £18,100

D) £21,100

Question 3 From 1 April 2017 the national living wage (for those aged over 25) will be:

A) £7.40 per hour

B) £7.50 per hour

C) £7.60 per hour

D) £7.70 per hour

Question 4 In a report prepared jointly by Pinsent Masons, The Pensions Institute and Pendragon they likened pensions to:

A) Chocolate

B) Ice cream

C) Liquorice

D) Toffee

Question 5 The new Pension Advice Allowance is due to be introduced from:

A) 6 April 2017 at £500

MCQ 2

Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

B) 6 April 2018 at £500

C) 6 April 2017 at £1,500

D) 6 April 2018 at £1,500

MCQ 3

Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

Answers to the MCQs

Question 1 Key option C).

Question 2 Key option C).

Question 3 Key option B).

Question 4 Key option A).

Question 5 Key option B).