Pensions insight
Pension news
TPR’s new approach THE PENSIONS Regulator (TPR) has recently published the report Making workplace pensions work – TPR Future – our new approach (https://bit.ly/2D8BU32), revealing that it has begun implementing a new regulatory model to drive up standards and tackle risk by engaging proactively with a larger proportion of the pension schemes and employers it regulates. This new model, which covers all its operations, has been designed to be flexible and to enable a systematic approach as well as respond swiftly to the unexpected. In implementing the new approach, TPR will be a more visible and proactive regulator. It will be testing different ways of doing things, and pension schemes will experience different levels of scrutiny depending on the risks identified in the particular scheme or segment of the pensions landscape. As part of the increased visibility, TPR will provide updates on key milestones and practical examples of its work wherever possible. FCA publishes new policy statement NEW RULES and guidance on improving the quality of pension transfer advice have been published by the Financial Conduct Authority (FCA). The new rules (see policy statement PS18/20 – https://bit.ly/2zQp85r) set out how advice should be provided to consumers on pension transfers where they are considering giving up safeguarded benefits, primarily for transfers from defined benefit to defined contribution pension schemes. Though the FCA is taking forward most of the proposals it consulted on earlier this year, it is not proceeding at this time with its proposal to amend the definition of a pension transfer. Reaction to AE increase FIGURES RELEASED by the Pensions and Lifetime Savings Association (PLSA) reveal the overwhelming majority of savers have continued to pay into their pension, despite fears they’d be put off by the increase in minimum automatic enrolment (AE) contributions in April this year. Numbers for the three largest master trusts – NEST, NOW: Pensions and The People’s Pension – show that in the period January to March the average proportion of members stopping saving was 3.3%, which increased to 3.5% in the period April to June. Figures from the largest master trusts also show that opt-out rates – the number of people who leave the pension scheme within one month of joining – have remained steady since April. The average rate for the three master trusts between April and June was 6.2%. With minimum contributions increasing to 8% in April 2019, the PLSA is urging the industry and government to continue to work together to help savers understand the benefit of saving into a pension, including the value of employer contributions and tax relief.
Big tax increases due to LA breaches THE TAX collected from individuals breaching the pensions lifetime allowance (LA) has rocketed by £100,000,000 since its introduction in 2006. The latest figures show £110m in tax collected from individuals exceeding the allowance during 2016/17, compared with less than £10m in 2006/7. WEALTH at work, a specialist provider of financial education and guidance in the workplace supported by regulated advice for individuals, believes that individuals who breach the LA typically fall into one of the following three employee categories: those blissfully unaware, those who think they are a long way off, and those thinking they are protected but aren’t. There are some steps that employees can take to either avoid or reduce the impact of the LA: assess their current situation; consider alternative savings vehicles; opt-out of their workplace pension scheme; or take early retirement. Jonathan Watts-Lay, director, WEALTH at work, comments: “Many workplaces now offer support to their employees in terms of financial education, guidance and advice. This approach helps both the employer and the employee by ensuring employees understand all their options before making what could be life-changing decisions, therefore leading to better outcomes.” estimating how long their pension pot will need to last. “The government has already announced increases to the state pension age based on an expectation of increasing life expectancy and [these ONS] figures may be used to challenge the timing or indeed need for planned increases to 66, 67 and 68.” Life expectancy THE STATISTICAL Bulletin – The National life tables, UK: 2015 to 2017 (https://bit.ly/2zQp85r) – reveals that in the period 2015–17, life expectancy in the UK: ● at birth, remained at 79.2 years for males and 82.9 years for females ● at age 65, remained at 18.6 years for males and 20.9 years for females ● remained lower than in many other comparable countries internationally. Sophie Sanders, Centre for Ageing and Demography, Office for National Statistics (ONS), commented: “This slowing in improvements [in life expectancy] is reflected in the chances of surviving to age ninety years from birth, which has also seen virtually no improvement since 2012 to 2014.” Steven Cameron, pensions director at Aegon, said: “The pension freedoms have made it absolutely critical that individuals with help from advisers have the right information and tools to plan for retirement, especially when it comes to
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Issue 45 | November 2018
| Professional in Payroll, Pensions and Reward |
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