Articles - Where are we?


During the Parliamentary recess there is little to report in the exciting world of pensions and politics but the summer calm (after Ros’ departure) may be a good time to take stock on what’s on the Government’s agenda. So here we have a round-up of the ongoing legislative issues that are coming down the pipeline.

 Pensions Bill
 There will be a Pensions Bill in 2016, although we are yet to see the text, but we understand from the Queen’s Speech and other utterances that it will cover:
     
  1.   Improvements to the regulatory regime governing Master Trusts. Primarily this will involve giving greater powers to the Pensions Regulator to authorise, supervise and take action against Master Trusts.
  2.  
  3.   Capping exit charges levied by trust-based occupational schemes and remove barriers to flexible access
  4.  
  5.   Streamline financial guidance via the establishment of a pensions guidance body and a money guidance body – effectively replacing Pension Wise and the Money Advice Service.
 Finance Bill
     
  1.   This stalled slightly thanks to the Brexit kerfuffle but is due to be passed in the Autumn and will include the majority of the Budget announcements including:
  2.  
  3.   The reduction in the Standard Lifetime Allowance to £1m from April 2016 and the CPI related increases from 2018.
  4.  
  5.   Lifetime allowance protection regime with regulation for Individual Protection 2016 and Fixed Protection 2016 together with the application process (which has already gone live in advance of the Bill becoming an Act)
  6.  
  7.   Alignment of tax legislation with DWP legislation concerning the treatment of bridging pensions
 Various tweaks to the Pension flexibility regime including:
     
  1.   Allowing a serious ill health lump to be paid from remaining DC funds where some of the benefits have already been accessed. They will also be taxed at the marginal rate (rather than 45%)
  2.  
  3.   Correct the dependant pension rules to allow those children (under age 23) to continue to access the benefits after their 23rd birthday.
  4.  
  5.   Permit DC funds to be paid as a trivial commutation lump sum
  6.  
  7.   Inheritance Tax rules will be amended so unused drawdown funds will not form part of a deceased member’s estate.
 Lifetime Savings Bill
 This is promised in due course and will include the legislation required to establish the Lifetime ISA (LISA). Although at the time of writing rumours abound that the delay in providing the legislative basis for the LISA will mean that many/most providers will not offer one next year and so there could be a delay before the LISA is introduced. There are further rumours that the whole idea could be shelved.
  
 Closed Consultations
 Secondary Annuity Market – The consultation was looking at the tax framework for paying proceeds of a sale as a lump sum via a flexi-access drawdown fund or flexible annuity. There are also details for extra information requirements. Consultation closed 15th June.
  
 A further consultation regarding the operation of buyers in the secondary annuity market on 2 June 2016.
  
 New Local Government Pension Regulations – consultation closed on 20th August which (amongst other minor things) introduces the “Fair Deal for Staff Pensions” for staff in the local government pension scheme who are compulsorily transferred to another service provider.
  
 Early exit cap – a DWP consultation is looking at exit charges from trust based occupation schemes when a member leaves the scheme early in order to access their pensions flexibly.
  
 The consultation closed on 16th August.
  
 British Steel – the Government’s consultation included proposals to deal with the British Steel Pension scheme – including options to continue the scheme without an employer, require Tata Steel to pay the debt or amend benefits. The impact of the consultation (which closed in June) could be far reaching.
  
 Open consultations
 NEST – the DWP is consulting on whether NEST’s remit can be expanded to provide drawdown benefits and whether people (for instance with a LISA) can transfer to it to access benefits and whether contributions could be accepted from other individuals (e.g. those with a pension sharing order or the self-employed). The consultation closes on 28th 
  
 September.
 Salary sacrifice – HMRC are consulting on changes to the salary sacrifice regime to limit their use so that benefit in kind benefits provided via salary sacrifice will be chargeable to income and NICs. The consultation will close on 19th October 2016. There is also a related consultation on the treatment of termination payments to make NICs payable on amounts over £30,000 (currently subject to income tax only). This consultation closes on 5th October 2016.
  
 On the radar
 PPF Cap - In the Pensions Act 2014, the Government legislated for a long service cap which would benefit those with more than 20 years’ service. However, the legislation was never commenced. This must be on the agenda (and is mentioned in the British Steel consultation) and may come into force soon.
  
 Triple-lock – the expense of the triple lock (promised to remain in place until 2020) has returned to the political agenda with proposals to replace it with the double lock (CPI and earnings) or just earnings abounding. It would seem simpler to link it to earnings, aren’t pensions meant to be a replacement for earnings?
  
 GMP sex equalisation – a class action lawsuit being brought by the Lloyds Trade Union Lloyds against Lloyds Banking Group regarding equal payments for members of its DB pension scheme in receipt of GMP threatens to bring this issue to the fore again.
  
 Tax-relief – things have gone relatively quiet on the tax relief debate of late – perhaps the change in focus in the Government’s economic policy to reduce the deficit (and the dual effect of the annual and lifetime allowances) means that the Government is happy to let this one lie for a while.
  

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