The Pensions Regulator updates COVID-19 guidance 18 September 2020
As life begins to return to some form of normality following the disruption caused by coronavirus, The Pensions Regulator (TPR) has issued a press release to highlight to pension schemes the fact that it is returning to its normal reporting and enforcement measures.
Updated guidance has also been made available, and the main areas for consideration are as follows:
• In response to the outbreak of COVID-19, TPR extended the period in which Defined Contribution (DC) pension schemes and trustees had to report any late contribution payments. The temporary extension took the period from 90 days up to 150. This was to provide support to any employers struggling to bring late or missing payments up to date, by allowing them more time to work with pension providers, prior to any enforcement action being taken • Guidance, which is due to be reviewed alongside other COVID-19 guidance in September 2020, ensures that, as of 1 January 2021, DC schemes and providers will be asked to revert to the previous practice of reporting late contribution payments within 90 days of their due date. This will become mandatory from 1 April 2021 • TPR has maintained throughout the duration of the pandemic that employers must continue making contributions in full, and on time. The extension of the deadline in which to report late payments was introduced in recognition of the pressure on employers in terms of TPR’s approach to enforcement • From 1 October 2020, other types of enforcement will begin to return to normal on the levy side. Schemes will be required to submit audited accounts and investment statement reviews. TPR also intends to return to reviewing chairs’ statements submitted from that date onwards, as usual. These requirements were temporarily eased by TPR to allow trustees to focus on the imminent risks that the pandemic posed to their schemes. TPR will continue to take a risk-based, proportionate approach to any enforcement decisions
The full press release can be located here.
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TISA launches proprosals to overhaul Auto- Enrolment as part of ‘Getting Retirement Right’ 23 September 2020 The Investing and Saving Alliance (TISA) has published four additional proposals in relation to changes to Auto- Enrolment (AE), which would see individuals earning below £17,500 being given the option to opt out from their own AE contribution, whilst still receiving their employer’s contribution. It is hoped that this would help those that are financially insecure, and the proposals have been made in conjunction with some of the major pension and investment firms. TISA is running a ‘Getting Retirement Right’ scheme, which aims to ensure that everybody has the opportunity to plan, prepare and ultimately, enjoy their pensions and retirement. The main proposal would mean that those who are less financially secure are less likely to have to deal with escalating debt levels or forfeiting household essentials in order to remain in a workplace pension, but that employers would still be required to contribute. Extensive research in this area highlights the fact that those who are lower earners struggle to pay their personal contributions, but do not opt out, indicating that these individuals rely on increasing levels of personal debt instead. The Department for Work and Pensions (DWP) defines ‘low pay’ as 60% of national median earnings. Figures from the Office for National Statistics (ONS) show that the median household disposable income for the tax year ending 2019 was £29,400, and 60% of this is £17,500. This is the basis for the figure under which individuals would be able to opt out of personal pension contributions, but still receive the employer’s element. This threshold would be reviewed on a yearly basis. At present, AE contributions amount to 8% of qualified earnings, 5% of which comes from the employee and 3% that is contributed by the employer. In February 2020, an initial research paper was published, which found that, for a median earning household, a contribution level of 12% of whole salary would be required in order for families to achieve a moderate retirement, when added to full state pensions. Newer proposals recommend that the 12% should be shared
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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