Pensions Tax Simplification
Newsletter No 7
November 2005
Contents
2. Extra Statutory Concession A10
4. How we will communicate with you via Pension Schemes Online
a) Registered Pensions Schemes Manual
b) Policy
c) Pension Schemes Online
d) Data cleansing
e) Preparing for A-Day workshop material
1. Introduction
This is the seventh edition of the Pensions Tax Simplification Newsletter. The Newsletter keeps pension providers, employers and savers informed of new developments before A-Day. If you are a pension provider or an employer, please make sure that the appropriate people in your organisation read it.
2. Extra Statutory Concession A10
Extra Statutory Concession A10 provides an employee with relief from taxation
on a lump sum received from an overseas pension scheme to the extent that
it relates to overseas service (broadly, to duties undertaken while the
individual was not UK resident).
The effect of ESC A10 will continue from 6 April 2006.
The concession will be interpreted in the following ways in the light of
the new simplified tax legislation:
- “overseas retirement benefits scheme” and “overseas provident fund” will be interpreted as overseas employer financed retirement benefits schemes, as defined in section 393A ITEPA.
- The concession will continue to apply to lump sums received from schemes within section 615(6) ICTA.
- “relevant benefits” will be defined in accordance with section 393B ITEPA.
- The concession will not apply to any benefits chargeable under Schedule 34 Finance Act 2004.
3. PIWG survey and results
Thank you to the Pensions Industry Working Group (PIWG) members who completed the second survey. The responses and comments received provide us with valuable information and suggestions for the way forward.
This was the second PIWG survey. The first survey was carried out in November 2004, with volunteer names being provided through the PIWG. These same names were used for the second survey, although some people have responded this time that did not respond to the first survey, and vice versa.
The second survey was altered slightly to gain better feedback of the customer service functions provided by APSS, along with a new question, which related solely to the development of IT systems within the industry.
Of the 49 surveys issued, 30 completed surveys were received. Although this does not provide us with a statistically valid sample it has provided us with a useful snap shot of the industry’s views of both its readiness for the new regime at April 2006 and the level of customer service it is receiving from APSS.
Full responses from the survey have been captured as graphical representations and can be viewed as a PDF file at appendix A (PDF86K) . In this article, we have concentrated on the issues directly affecting simplification and the industry’s readiness for A day although the full survey results can be found within appendix A (PDF86K). The main points taken from the responses are:
- Two thirds of the industry indicated that they fully understand the new regime, which is an increase from the last survey of 13%. 50% of the industry think their customers understand what the new regime means for them. This is also an increase with only 20% thinking their members understood previously.
- 96.67% of the respondents felt they would be ready for A-Day, which is the same as in the previous survey.
- We asked the industry how prepared they are for A-Day in various preparatory areas, such as people training and support, informing customers, developing products or scheme design. On the whole the industry responded that they are ready in some areas, or have plans in place, with some stating they are ready in all areas. A further breakdown of these results can be found within the charts at appendix A (PDF86K).
- We also asked the industry how prepared they are in terms of on-line filing. The majority stated they had plans in place, or were analysing requirements with only 2 respondents stating they were ready in all areas with the development of their IT systems, again a further breakdown can be found in appendix A (PDF86K).
We received various comments and recommendations on how to move forward and assist the industry in preparing for the new regime. We have been able to take on board some of your comments immediately and are in the process of considering how we might improve in some of the other areas that these respondents identified, for example,
- The Registered Pension Scheme manual has now been published in a new printable (PDF) format and a chapter has been included that provides information that should assist with navigation of the manual
- We hope to have all the printable (PDF) versions of the guidance available on the Internet by the end of December 2005.
- We intend to include frequently asked questions on the Website shortly.
- We are providing more briefings and technical support for our Helpline staff.
We plan to reissue the survey in February 2006 to again track the industry’s progress in preparing for A-Day.
Once again, thank you to those of you who were able to take part in this survey.
4.How we will communicate with you via Pension Schemes Online
When you have registered as an administrator or practitioner to use Pension Schemes Online you can choose to receive automatic notices and reminders on your individual Pensions Noticeboard. To do this you need to provide us with your email address. You can provide this information as part of the Pre-Registration exercise or provide it when you register to use the system after April 2006. You can choose to receive paper notices and reminders if you prefer.
But if you do not provide an email address and you do not opt to receive paper notices and reminders when you complete registration for Pension Schemes Online then you will not receive either an email alert or a paper notice or reminder. You will need to log into Pension Schemes Online on a regular basis to check for your notices and reminders.
5. Your enquiries
Many of you contact us with enquires that you have on the new regime. As you are aware we try to provide good customer service by answering as many of these as fully and as quickly as possible.
But increasingly people are not always directing their query to our dedicated Helpline (0115 974 1600 or 0115 974 1777) or referring to the Registered Pension Schemes Manual. Instead they prefer to go direct to one of our technical advisors. The effect of this is that all too often the technical advisors are responding to questions which the Helpline staff could answer, thus slowing down the response times especially for those more involved "one-off" type questions. Our technical advisors are also heavily involved in drafting Regulations and guidance material for the Registered Pension Schemes Manual and so cannot always reply to your queries as quickly as we would like.
One possible solution is for organisations to submit common questions from their members instead of individuals sending in similar queries Indeed some organisations have already approached us to see if they can do this. This is an excellent idea and we will take this forward with a view to publishing the answers regularly on our website alongside other frequently asked questions that we receive . If other organisations would like to adopt a similar approach please contact Paul Cottis.
6. Latest news
a) Registered Pension Scheme Manual
Two further chapters of the RPSM (Death benefits and International) are now available in the printable PDF format. We have also republished Chapters 9 and 10 in PDF format as there were errors in the earlier version. The current version should now be an exact copy of the non-printable(HTML) version that was already available.
b) Policy
A revised draft Regulation was published on 17 November titled The Pension Schemes ( Categories of Country and Requirements for Overseas Pension Schemes and Recognised Overseas Pension Schemes) Regulations 2005.This replaces an earlier version of the same title which was initially published on 9 March. This earlier version has now been removed from the Internet to avoid confusion.
We continue to work closely with the pensions industry as we approach the start of the new tax regime in April 2006. With industry representatives we have jointly identified a small number of additional regulations that are needed to give full effect to the new regime. Further details are provided below and we aim to publish draft regulations in the next couple of months.
We welcome comments on published regulations, and where appropriate, will aim to re-publish amended draft regulations over next couple of months. We also aim to lay draft regulations in tranches.
Additional regulations
- Arrears of pension
Where a scheme is obliged to pay an amount to a member representing pension from the date the member could have claimed it to the date the member actually became entitled to the pension in accordance with the Finance Act 2004 provisions, a regulation is proposed to ensure that such an amount will be treated as an authorised payment.
- Dependants’ scheme pension rules
Under the new regime there is a limit on the amount of dependants’ scheme pension that may be paid, which is calculated by reference to the amount of the member’s pension. A transitional order is proposed to provide that the dependants’ scheme pension limit will not apply where the member’s pension was already in payment at the start of the new regime on 6th April 2006
- Serious ill-health lump sums
Serious ill health lump sums are not intended to be available to people with pensions in payment, but we have identified a technical flaw in the legislation, which would permit them to be paid where someone has a pension already in payment at A-Day. A transitional order is proposed to prevent this.
- Lump sum death benefits
Under Finance Act 2004 the intention is for pension protection lump sum death benefits, and annuity protection lump sum death benefits, to be available to all, including those with pensions in payment. But as drafted the legislation would deny them to people with pensions already in payment at A Day, so a transitional order is proposed to correct this.
At the PIWG meeting on 22 November a number of technical and operational points were raised, including life cover and enhanced protection and how you obtain a Pension Scheme Tax Reference after A day. We will be publishing the answers to these points in the next Newsletter in December.
c) Pension Schemes Online
We met with the PIWG on 22 November to discuss the impact of the postponement of e mandation on the pensions industry. Notes of this meeting will be published shortly. The initial feedback from the members of the group was that the delay in mandatory online filing and phased in releases wouldn't cause a major problem, although the industry wants certainty about what will be ready by when.
d) Data cleansing
The announcement of a delay to full e-mandation does not affect the exercise to pre-register scheme administrators and practitioners to use Pension Schemes Online. If they do not pre-register to use this service, APSS will have no record of who is the scheme administrator or practitioner after 6 April 2006. We will still require notification either online or on paper to associate scheme administrators and practitioners with schemes that will be deemed to be registered from 6 April 2006. And by doing this before the exercise concludes in January 2006, it will enable scheme administrators and practitioners to use the service from the outset of the new regime.
7. Contact us
If you have any questions about anything to do with Pension Tax Simplification please contact our Helpline number 0115 974 1600 or 0115 974 1777 (9.00 to 17.00 Monday to Friday)
If you have any comments about our newsletters then please contact:
Paul Cottis
Audit & Pension Schemes Services
Yorke House
Castle Meadow Road
Nottingham
NG2 1BG
0115 974 1692
