Notes of Pensions Industry Working Group meeting : 7 February 2007

Present:

Julie Elsey – Head of Pensions, Pensions Schemes Services (PSS)
Ann Walker – Head of Simplification Project, PSS
Kerry Singleton – Head of Compliance & Service Delivery, PSS
Anne Stubbs – Policy, PSS
Paul Cottis – Policy, PSS (Minutes)

Barry Bolland – AMPS
John Gleadall – ABI
Ken McIntyre – NAPF
Andrew Short – SPC
Karen Goldschmidt – ACA
David Phillips – AMPS
Diana Geneen - NAPF
Matthew Brown – CIOT
Cliff Vidgeon – IPPM
Mary Ball – DWP
Gabrielle Park - DWP

Action Points arising:


AP106 PC to set up meeting between appropriate HMRC staff and industry to discuss the administrative difficulties arising from the unauthorised payments and scheme sanction rules.

AP107 JE to talk to Angela Walker to ensure ASP discussion covered the position of those who had died post A-day in ASP and the interaction with IHT

AP108 PIWG members to provide feedback to AW on what would be needed from HMRC before the date it becomes mandatory for e-filing by 23 Feb 07.

AP109 If PIWG members have any comments or feedback around the January Newsletter article on readiness for new reporting in April 07 should be passed to Les Warner

AP110 PIWG members to pass any comments about the draft terms of reference or future make up of the PIWG to PC

AP111 JE to talk to Mark Bravery about FSA and SIPP regulation and transfers

1. Actions points from previous meetings

AP104 The group to let Ann Walker have details of representatives who could form a small sub-group to consider the issue of supporting new Scheme Administrators

This has now taken place, thanks to those who took part. From this we are working with the HMRC Communications & Marketing team to finalise and promote a short fact sheet with information for Scheme Administrators which we hope will give new Scheme Administrators a very brief overview of the key points and point them in the direction of where to go to find more detailed information about their roles and responsibilities.

AP105 Comments on making the Scheme Administrator responsible for the filing of the scheme self-assessment return (SA970) to be sent to Paul Cottis

No comments were received – are there any further thoughts now or please come back to PC if you have any thoughts later

There were two other APs carried forward from earlier meetings

AP091 HMRC to review the process for calculating scheme sanction charge where the member has made a payment.

This was discussed under Point 3 on the agenda

AP102 Julie Elsey agreed to speak to colleagues in DWP about setting up a joint meeting to which PIWG members would be invited.

DWP will in future be PIWG meetings, if there are specific issues still outstanding that have not been addressed or that come up in the future, please let PC know and we will try to either address these at the next PIWG or if appropriate at a separate meeting outside the PIWG.

2. DWP Deregulatory Review of Private Pensions

MB outlined the purpose behind the DWP review - to make the private pensions regulatory framework simpler and less burdensome, and to achieve cost savings for employers.

MB asked if the group could let her know of any regulatory irritants as well as burdens, for example where the legislation might be contradictory. She said that from this there would be a consultation paper in March.

3. Scheme Sanction Charge

JE said she was conscious that the issue had been outstanding for a while. What we needed now was to look at how the PBR proposals and the new guidance on errors would influence the number and sort of Unauthorised Payments going forward.

KG said she was putting a paper together on this from the A-day forum, they had identified 3 main areas:

  1. trivial payments which cannot nevertheless fit into an authorised category under FA04
  2. UPs where the benefit would be due under a scheme's pre A-day rules but for being unauthorised, and which therefore do not attract scheme sanction charge - ie those involving partially or wholly, entitlements accrued pre A-day where the payment is made post A-day
  3. Errors made by schemes where they are unable to correct, ie post death pensions of > £250 where they decide not to pursue recipient for overpayment.

JG said there was also a problem for PPs, where they had no control over contracting-out rebate from HMRC and often had to pay this as an unauthorised payment.

JE said we would convene a meeting as soon as possible with the industry, including lawyers, to discuss the issue.

AP106 - PC to set up meeting between appropriate HMRC staff and industry to discuss the administrative difficulties arising from the unauthorised payments and scheme sanction rules to see what solutions can be identified to ease any problems.

4. Update on PBR issues

Range of technical improvements and small consequential changes

Several areas had been identified which will give industry additional flexibility and cost savings without risk to the exchequer. The areas were:

  • Transfers and transitional protection
  • Ill health retirement
  • Pension commencement lump sum rules
  • Unsecured pension fund rules
  • 2 year time limit on lump sum death benefits and
  • Winding up lump sums
  • Non cash benefits

Small consequential changes

  • Investment regulated pension schemes and UK real investment trusts
  • Consultation

Two technical improvements for consultation were announced and they were:

  • Lifetime allowance test (BCE3) and Dependants Scheme Pension
  • Two consultation meetings to discussed possible changes and flexibilities to the LTA have been held so far and these were on 11 and 25 January. Two further meetings are planned to discuss DSP and they are scheduled for 8 and 20 February (both at 100 PS). There are places available for both meetings if anyone would like to attend, alternatively written/email representations would be very welcome.

The first part of the consultation process closes on 28 February.

Discussions

Discussions with interested parties have taken place (January) regarding the administrative costs of paying trivial commutation lumps sums and at the end of the discussion period HMRC the various views expressed on this.

Alternatively Secured Pensions

Draft clauses and explanatory notes have already been published. Further details will be made available after consultation on:

  • Implementation date
  • Untraceables – who would have automatically defaulted or have already defaulted into as ASP.
  • Interaction with IHT.

Tackling avoidance

Discussions around targeted anti avoidance measures to counter schemes making inappropriate use of tax reliefs for pension savings.

Pension Term Assurance

Discussions were held on 22 and 25 January to look at ways to put proportional controls in place that ensure tax relief intended for retirement provision is given for that reason and not for life insurance. No decision made yet and HMRC expect to have further discussions with the industry.

BB was concerned that there had not yet been discussions on how to deal with those people who had died post A-day in ASP, and the interaction with IHT. JE said she would talk to Angela Walker

AP107 - JE to talk to Angela Walker to ensure ASP discussion included the position of those who had died post A-day in ASP and IHT.

5. Online Services Update and e-mandation

AW said the third IT release had gone ahead in October successfully. Also on 17 January the Third Party Validation Service release including the Event Report, Registered Pension Scheme Return and the new Register a New Scheme form had taken place.

She said that Pension Schemes Online has now stabilised and that online filing figures were continuing to improve, with 88% of schemes registering online and 98% of Scheme Administrators for Deferred Annuity Contracts making their declarations online. For Accounting for Tax returns the filing rate for the second quarter had gone up from 32% to 71%

She said that the next release of the online service would be the final release, and the date would be announced via the Newsletter.

She asked if users had noticed any changes since the last meeting in the quality of the service or why users might still be using paper. JG said they were still using paper where volumes were less than expected, ie AFT returns.

AW said that it had always been proposed that it would be mandatory to provide the following information online:

  • Register a new pension scheme
  • Declarations by Scheme Administrators required under Section 270 Finance Act 2004
  • Notification of cessation as Scheme Administrator
  • Accounting for Tax return
  • Registered Pension Scheme Return
  • Event Report
  • Notification a scheme has wound up

She asked for comments by 23 February 2007 on views on what would be needed from HMRC before the date it becomes mandatory to file the above information online. For example:

  • what is the minimum notice period you would need?
  • what kind of support would be needed from HMRC in the run up to that date?

AP108 – PIWG members to provide feedback to AW on what would be needed from HMRC before the date it becomes mandatory for e-filing by 23 Feb 07.

6. Readiness for new pension scheme return and event report

AW asked if there was any feedback from the January Newsletter article on readiness for 6 April 2007.

AP109 – If PIWG members have any comments or feedback around the January Newsletter article on readiness for new reporting in April 07 should be passed to Les Warner

7. Role of PIWG going forward

PC explained that HMRC still saw a role for the PIWG going forward, but the terms of reference now needed to be reviewed as it had served its original purpose.

He asked for comments on the terms of reference as well as who should attend in future and where meetings should be.

AP110 – PIWG members to pass any comments about the draft terms of reference or future make up of the PIWG to PC

8. AOB

KS outlined the new structure of PSS and explained that the number of staff in her area were as roughly follows:

  • Compliance – 25 (addressing risk by enquiry and ‘check later’ process)
  • RIAT – 10 (they receive information and identify risk)
  • LTA – 5 (to process claims)
  • Processing – 25 (deal with SA/RAS etc)
  • Elections 15 – (on behalf of DWP contracting-out)
  • General 25 – (helpline, general enquiries, AFTs etc)

DP said that under new FSA rules for establishment of SIPPs, the established had to be registered. The FSA application form was very long and took up to 6 months to process. The number of providers currently registered was very few, 35% of expected new providers and 50% of existing providers. This might lead to people being in SIPPs that were not regulated wanting to move to another scheme, but because of tax rules would be prevented from transferring with their existing assets/rights without losing rights. DP asked if we could talk FSA about this

AP111 – JE to talk to Mark Bravery in PSS Policy about FSA and SIPP regulation and transfers

ASh asked about the notional earnings cap for 07/08. PC said this was with Treasury and would be published asap. He said that for next year we would look to try to publish earlier if possible.

The next meeting of the group will be from 2-4pm on 4 June 2007 in 100 Parliament Street.