Increasing numbers of pension savers are being targeted by unscrupulous companies encouraging them to access their pension savings early – commonly known as pension liberation. Pension liberation has significant tax consequences and HMRC has been working closely with other government departments/agencies and the pension industry to take action to prevent pension liberation and preserve pension savings. HMRC has made a number of changes to strengthen existing processes to deter pension liberation and safeguard pension savings. These changes will take effect from 21 October 2013.
Registering a pension scheme
HMRC has made the pension scheme registration process more robust by moving away from a 'process now, check later' approach. Scheme registration will no longer be confirmed on successful submission of the online form. This will enable HMRC to conduct detailed risk assessment activity before making a decision on whether or not to register a scheme.
Pension scheme registration - process change
Transferring pension funds between registered pension schemes
To help scheme administrators decide whether to make a transfer, HMRC has revised the process for responding to requests for confirmation of the registration status of the receiving scheme. Under this new process HMRC will respond to requests for confirmation of the registration status without seeking consent from the receiving scheme. However HMRC will only provide confirmation where the receiving scheme is registered and the information held by HMRC does not indicate a significant risk that the scheme was set up, or is being used, to facilitate pension liberation. Otherwise, a response will be issued setting out the conditions in which HMRC will confirm registration status and explain that one or both of the conditions are not satisfied.
Transfer request process change
Further information
You can read more about pension liberation on HMRC’s website. A recent Pensions Update by Pinsent Masons covers a key court ruling on pension liberation.
Better workplace pensions: a consultation on charging
31 October 2013
The Department for Work and Pensions has published a consultation setting out a range of measures to address pension charges in defined contributions workplace schemes.
Steve Webb, the Minister of State for Pensions says in the consultation foreword:
“While I am pleased that some large employers setting up schemes for automatic enrolment are getting good deals for their employees, there is a real risk that SMEs will struggle to negotiate the same low charges or will use high-charging legacy schemes. When small differences in charges can make a significant difference to final retirement incomes this is an area where we cannot afford to be complacent.
Therefore, through this consultation, we want to assess what can be done to improve transparency in pension scheme charges and to look at whether there is a role for the
CIPP Policy News Journal
16/04/2014, Page 437 of 519
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