Pensions Industry Working Group meeting notes
18 September 2006

Present:

Mary Hay – Director, Charity, Assets and Residence
Julie Elsey – Assistant Director, Pensions Policy
Jayne Banner – Assistant Director, Pensions Operations APSS
Jo Begg-McBrearty - Project Manager, Pensions Simplification
Ann Walker – HMRC Pensions Simplification
Martyn Rounding – HMRC Pensions Policy
Angela Walker – HMRC Pensions Policy

Barry Bolland – AMPS
John Gleadall – ABI
Ken McIntyre – NAPF
Richard Hardy – SPC
Karen Goldschmidt – ACA
David Phillips – AMPS
Eleanor Dowling – CIOT
Anne Redston – CIOT
Cliff Vidgeon – IPPM

Action Points arising:

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

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

1. Actions points from previous meeting

These were published on the Internet on 12 July 2006. Comments were made in respect of:

AP091 – HMRC to review the process for calculating scheme sanction charge where the member has made a payment. Representatives reflected back that the process still remained long winded and difficult to enforce. It was agreed that the project would continue the discussion around this point by e-mail with the group. Carry forward

AP102 - PIWG members to let PC know of any outstanding DWP/HMRC issues.

It was felt that the action points raised in connection with the DWP were not fully addressed by the e-mail response from PC and that a meeting would offer the opportunity to discuss joint working between DWP and HMRC.

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

2. The New Regime

A discussion followed led by Julie Elsey with regard to some of the issues that had arisen during the first few months of the new regime bedding in.

3. Lessons Learned from the Accounting for Tax Return for the end of June

Jayne Banner summarised the position from the operational perspective with regard to the Accounting for Tax Return for the first quarter. The main points were as follows:

• The volumes were a lot less than expected being around 17.5% of those numbers forecast. This was surprising given that HMRC had tested its assumptions on volumes on a number of occasions with the PIWG. The group advised that during the first quarter there had been a three month entitlement period for members to either transfer their funds into a new pension pot or seek a short service refund. This stemmed from DWP legislation. The group anticipated that the return of AFTs would increase during the second quarter by at least twice the current volumes.
• Only one-third of AFT returns had been filed on line. The group considered that the process of pre-registering for the service and registering a scheme had caused much confusion and forced some to go down the paper route due to the lack of time available between the registration processes and the first AFT return due date. There had also been conflicting messages given out on the helplines about how to file an AFT and make payments.
• Some payments were sent with forms to APSS instead of directly to the Accounts Office. The group felt that this had been caused by the lack of PSTR and charge reference that meant the paper option was more efficient. On top of this there had been numerous system failure messages kicking people out of Pension Schemes On-line.
• There appeared to be a lack of understanding about the need for returns to be signed by the Scheme Administrator. The group itself explained that they didn’t all appreciate that payments and returns made on line could indeed come from an unauthorised as well as authorised practitioner. It was considered that neither the Online Helpdesk, nor literature on the web pages clarified this position.
• Allowances were made in the first quarter for some incorrectly completed forms that were received by paper. However, in the future the same level of validation would be carried out on both the paper and on-line forms.

In response to the industry’s comments, HMRC confirmed that it was drawing together a special edition newsletter to specifically support the pre-registration of a Scheme Administrator and practitioner as well as registration of a pension scheme and filing of AFT return. It was noted that some defects in the system had been put right during the course of August, but this had not necessarily given on-line filers the opportunity to take advantage of the system with sufficient time to spare.

4. Pension Schemes On-line

Ann Walker ran through six areas with regard to the On-line service.

a) Progress to date

• It is important to recognise that Scheme Administrators and Practitioners can view information held by HMRC and transact online with HMRC, neither of which were possible before April 2006. July had seen the second release of the service to enable on-line filing of AFT returns, notification of cessation by Scheme Administrators and amending scheme details. The Third Party Validation Service for relief at source had been released on 30 August.

b) Later releases

• Still to come over the next six months are various releases which will be signposted by newsletter articles. These include functionality to support the event report, registered pension scheme return, contracting-out and single registration. The Third Party Validation Service (TPVS) in respect of many of these will become available in the New Year.

c) Impact of TPVS being available in New Year

• The Third Party Validation Service in respect of functionality that will become available in April will now be released early in the New Year. Ann asked the group whether this was having an impact on the work that they were doing or their plans. There was a limited response but members of the group advised that their IT systems were not being developed for a year whilst they waited to see what changes were being made.

d) Feedback on customer experience

• In terms of feedback that HMRC had received from customers with regard to the service, Ann recounted that there had been comments concerning the quality of paper and online outputs, letters and messages, as well as help texts not appearing or links not working.

Ann confirmed that all of these have either been fixed or are in the process of being fixed. Other comments had been raised on

• the navigation and the difference between the welcome page and the pension scheme summary page
• an incomplete task appearing even though a submission receipt has been received
• IDs and activation tokens not getting to the right person in a large organisation

In respect of each of these, she advised that further guidance will be provided in the special newsletter mentioned earlier which will then go on to appear in the Registered Pension Scheme Manual.

Other issues have been identified:

• no pre-population of address details when an ID has been entered for a Scheme Administrator by an Authorised Practitioner
• Authorised Practitioners not being able to see the Scheme Administrators personal details and IDs
• Scheme Administrators being unable to see the Accounting for Tax return before submission

In respect of this last group, customers have asked for this functionality but HMRC are unable to provide it due to either confidentiality issues or security of the data. Consideration is being given as to whether changes can be made in the future to these areas but not in the foreseeable future.

There then followed a discussion whereby members of the PIWG were able to feed back their views of the online service thus far. A number of poor experiences were shared in the group. HMRC thanked the reps for this feedback and said they will consider it alongside other feedback that has been received with a view to improving the service

e) Volumes filed online

Ann went on to advise the group that despite the various problems with filing on-line, a significant proportion had been choosing to do this over paper submissions. Of those Scheme Administrators who had pre-registered, almost 60% had then gone on to register for Pension Schemes On-line which is a higher than expected proportion. 69% of new schemes registered on line. 76% of declarations by Scheme Administrators of deferred annuity contracts were made on line and 86% of amended scheme details were done so on line. The AFT process is the only one in reverse with only 32% filing on line and it was acknowledged that we would be seeking to turn this figure around during the next quarter with the support of a special newsletter which will provide guidance on the end to end process and hopefully make it easier for the current and subsequent quarters.

f) E-mandation

Ann explained that HMRC would like the industry’s views on the best way to carry out the review as to when to commence the e-mandation of reports and returns of information. There were options around whether it should be introduced all at one date or at different dates and when. Views were also sought around the period of notice that would be needed. The HMRC team recognised the potential for non-respondents to questionnaires and the pitfalls of cold calling and sought the views of the group as to how best consultation should be handled. A couple of suggestions were made:

• Pensions Schemes Online could be used to identify Practitioners and Scheme Administrators who have chosen to file online already and their views sought.
• An electronic questionnaire could be posted on the various representative groups websites for groups to respond to.

5. Support New Scheme Administrators

Ann identified the issue that HMRC has with promoting the new tax rules to individuals and providing appropriate support. She noted in particular that there were a number of Scheme Administrators who have recently taken on this role who may be unfamiliar with their new roles and responsibilities. In order to ensure clarity about future interactions with HMRC she wished to draw together a group who could explore

• who these individuals are
• what information they may already have
• how many of them will be unrepresented
• how HMRC can support them and communicate with them

The group felt that insured schemes were most likely to be affected as well as the small self-administered schemes who may be operating completely alone having lost their pensioneer trustee. They noted that an audit might identify problems in complying with the new regime.

AP104 - The group to let Ann have details of representatives who could form a small sub-group to consider this issue.

6. Scheme Administrator involvement in a Pension Scheme SA Return

HMRC is exploring ways of dealing with repayments other than through self-assessment. Part of this work encourages us to consider making the Scheme Administrator responsible for the filing of the scheme self-assessment return rather than the trustees. HMRC would be interested in the industry’s views on this and any likely impact.

AP105 - Comments to be sent to Paul Cottis in the first instance who will ensure they are forwarded to Les Warner to consider.

7. AOB

The Registered Pension Scheme Manual has now been published in full and there is an e-mail link from Pensions Schemes front page to direct enquiries.

An article will be published shortly in the Simplification Newsletter around the de minimis limits that are applied by HMRC.

The next meeting of the group will be on 30 November 2006.