Pensions industry Working Group (PIWG) Meeting Notes

22 November 2005 100 Parliament Street

HMRC Attendees

Mike Wells (MW) (Chair)
Jo Begg-McBrearty (JBM)
Jayne Banner (JB)
Catherine Hunter (CH)
Steve Degnan (SD)
Graeme Morgan (GM)
Paul Cottis (PC) – Minutes

Pension Industry Attendees

Teresa Turner (TT) –representing the National Association of Pension Funds (NAPF)
Richard Hardy (RH) – representing the Society of Pension Consultants (SPC)
Charles Milne (CM) – representing the Association of Independent Financial Advisers
(AIFA)
Teresa Sienkiewicz (TS) – representing Institute of Chartered Accountants England & Wales (ICAEW)
Eleanor Dowling (ED) – representing the Chartered Institute of Taxation (CIOT)
David Phillips (DP) – representing the Association of Member-directed Pension Schemes (AMPS)
Barry Bolland (BB) - representing the Association of Member-directed Pension Schemes (AMPS)
John Gleadall (JG) – representing the Association of British Insurers (ABI)
Penny Green (PG) – representing the Pensions Management Institute (PMI)
Brian Wilson (BW) – representing the Association of Consulting Actuaries (ACA)
Alistair Elliott (AE) – representing the Pensions Regulator (TPR)

Action Points

  • AP074 JBM to provide an update on the timetable for the laying of regulations
  • AP 075 GM to clarify if the online AFT return will be printable from July 06
  • AP 076 PIWG members to let PC have thoughts on why it might not be feasible to proceed with e-mandation for payments at this stage
  • AP 077 GM to clarify how Scheme Administrators and Practitioners would get the new Pension Scheme Tax Reference after A-day
  • AP 078 JBM to look into and report back to the PIWG the position of National Insurance Contributions and unauthorised payments and how these would be reported and whose responsibility they were
  • AP 079 CH to let PIWG members see copies of factsheets
  • AP 080 PC to provide PIWG members with the position on life cover and enhanced protection
  • AP 081 PIWG members to let PC have their top outstanding issues. PC would pass these onto MW as well as Policy and Technical as appropriate
  • AP 082 SD to let PIWG members know if PAYE applies immediately to RAC annuities coming into payment after 5 April 06
  • AP 083 PIWG members to let SD have any comments on the suitability or practicality of delivering the message and using the draft wording provided
  • AP 084 SD to produce more polished version of TrC note, for publication on next available Simplification Newsletter
  • AP 085 SD to advise whether or not the repayment claim form could be sent with the notification of the trivial commutation payment to the member.

1. Welcome

MW welcomed everyone to the meeting.

2. Action Points from the last meeting

CH went through the action points of the last meeting

AP068 – SD to send email invite to all PIWG members to discussP60 substitute.
Done

AP069 – JG to send us email outlining the problems with the P60 substitute as he sees them.
Has been received

AP070 – GM to send list to PIWG of who contacted and who spoken to at each company.
Done to those who requested the information at the PIWG

AP071 – MH to contact PIWG members about IHT in October.
Completed

AP072 – Send RL a copy of latest industry survey.
Completed

AP073 – Send PIWG members instructions of how to find creation dates for pages on RPSM.
To do this, you need to right click when on the internet page, click on “view source” and scroll down the text until you find “date issued”. There is also a search facility within view source.

3. Project Update

PC gave an update on the project.
Forms
Up to date versions of all of the Registration & maintenance forms were published on the Internet on 01/11/05. Work has now begun on reviewing these to make any amendments necessary to convert to paper forms following the Ministerial announcement on 11/11/05.

RAS
We have been working on a new version of the "Magnetic Media Specification for Returns of Information for tax years 2006-07 onwards" for those registered pension schemes operating relief at source. This should be available on the Internet by early December. The new document will not replace the current version, which is needed for the reporting of information data for the current year 2005-06. Both versions will run in tandem until after 5 October 2006 when the current version will become obsolete.

Guidance
We have published all technical chapters bar 1 on the Internet. The missing chapter is the one containing the Advice on the Provision of information regs. this has gone to the publishers and should be ready Jan 9th. However we hope to have this available as a pdf download before Christmas

This completes the technical material out as pdfs. We have published material as a pdf version on a couple of occasions before it has gone on the internet because we understand the need to get this material to the industry as soon as possible. We have received a few enquiries about amendments and why we have not amended the manual when an error has been identified. The answer is that considering the size of the manual there have been relatively few errors identified and so we have been focusing on providing the core material first i.e. the technical chapters. We do have limited technical resources and we will finish the technical chapters then fill in the missing, employer, administrator and member pages to complete the whole picture . After we have done this we will turn our attention to amendments.

Policy
Further regulations required under the FA04 legislation are being drafted, mainly on transitional arrangements. We are working to publish these as quickly as possible. A further tranche of regulations were published on the HMRC website on 21 October, which brings the total published draft regulations to 51. We expect to be in a position to start laying the first tranche of Regulations before the end of the year. We will also need to begin drafting regulations to give full effect to the FB05 measures. Work is continuing on drafting instructions for OPC on measures for FB06. The GAD tables for determining levels of income from unsecured funds were published on 4th November. The consultation will run until 31 December.

It was asked whether or not HMRC would be publishing a timetable for the laying of the regulations and whether they would all be laid 3 months before A-day as industry had originally been told. JBM was not sure if this would be available, but recognised that there was need for certainty as soon as possible on the regulations. JB asked if it would be helpful to identify regulations which have no further material changes. It was agreed for administrative purposes this was acceptable and helpful but not for legal purposes where final versions were required.

AP074 JBM to check whether timetable for laying of regulations is to be published.

PIWG members saw the Modification of Scheme Rules regulations and the Provision of Information regulations as the most important.

4. Online filing

GM made a brief presentation on the current position on online filing following the Ministerial announcement on 11th November 2005.

He confirmed that the specification for the first Pension Schemes online release was firm and that at the next meeting he would run through the detailed functionality of this. The further releases after April would be in line for when reports were needed. There would not be online filing for enhanced lifetime allowance claims until Autumn 06.

GM added that the release dates for the Third Party Validation Service (TPVS) would be aligned with the release dates for the Pension Schemes Online service. HMRC’s Software Developer Support team would be continuing to hold regular software vendor forums to discuss the releases and provide technical support to both in-house and commercial software providers. The new timetable for the IT releases was discussed at the last forum on 14th November, where we had feedback that the postponement of mandation was broadly welcomed in that it gave more breathing space particularly for in-house developers. Most commercial developers felt confident that by the time of testing, their products would be ready. GM said that whilst we couldn’t change the June TPVS date, we would do everything we could to turn testing around quickly from 28 June.

GM was asked if the online version of the AFT form would be printable before submission, and GM said he would confirm if this was the case

AP 075 GM to clarify if online AFT will be printable from July 06.

GM added that e-payments would not be affected by the new delivery schedule for Pension Schemes Online, and asked the PIWG members whether they believed there was any reason not to have e-mandation for payments. There were no objections at the meeting, and PIWG members were asked to let HMRC know if they did foresee any difficulties with mandation of electronic payment from A-Day.

AP 076 PIWG members to let PC know if they had any problem with of e-mandation of payments.

There followed some discussion about how practitioners would get the new Pension Scheme Tax Reference for existing approved schemes. GM explained that by using the online service, the new reference would be provided when the old SF reference is entered. However consideration also needs to be given to how new reference numbers will be provided where the online service is not being used..

AP 077 GM to clarify how Scheme Administrators and Practitioners would get the new Pension Scheme Tax Reference after A-day.

MW then asked members for comments on the online delivery plans. It was agreed that online was the preferred choice, however they would need certainty over what would be available when as soon as possible to assist with their preparations.

JB confirmed that HMRC were putting into place contingency plans, which was why it was important to ascertain soon whether or nor customers would use the online service as this would help plan resources.

JBM said that the final individual forms for transitional protection would be published a month before A-day although these could not be submitted before 6.4.06. If they were, the forms would be returned. But the scheme registration and reporting forms would not be available until A-day. Draft forms would remain available on the Pensions Simplification webpages until that time.

There was some discussion about the accounting and reporting of NICs on unauthorised payments. The Scheme Administrator would also be unable to authorise deductions from the payroll even though these may required.

AP 078 JBM to look into and report back to the PIWG the position of National Insurance Contributions and unauthorised payments and how these would be reported and whose responsibility they were.

5. Discussion of communications going forward

CH outlined the work done on communications to date and what was planned going forward. She reminded PIWG members that if there are key events that they feel HMRC should have a presence at they should get in touch with PC or CH.

She also said that a number of factsheets were being prepared and promised to circulate copies to PIWG members.

AP 079 CH to let PIWG members see copies of factsheets.

CH asked PIWG members what support and assistance they required up to A-day. In the following discussion, life cover during enhanced protection and a number of outstanding technical and legislative issues raised.

AP 080 PC to provide PIWG members with the position on life cover and enhanced protection.

MW invited PIWG members to write in not with an exhaustive list of every technical query they might have but with their top issues that were presenting major obstacles to a-day planning so that we can prioritise what was outstanding and assist wherever possible in getting the required answers as quickly as practicable. This would also help us to understand whether there were a few common problem areas across the whole industry or a diffuse and disparate range of issues of greater or lesser importance for particular sectors.

AP 081 PIWG members to let PC have their top outstanding issues. PC would pass these onto MW as well as Policy and Technical as appropriate.

6. Trivial Commutation and the application of PAYE

SD confirmed that from April 06, Scheme Administrators making trivial commutation payments to members from schemes and annuities, including RAC annuities, would need to apply PAYE deductions.

It was asked whether RAC annuities commencing between 6/4/06 and 5/4/07 would also be subject to PAYE from the outset even though RAC annuities already in payment will only come within PAYE from 6/4/07.

AP 082 SD to let PIWG members know if PAYE applies immediately to RAC annuities coming into payment after 5 April 06

SD explained how PAYE will apply to TrC payouts. He explained that payers will operate either the code number already in force (where pension already in payment), or emergency code (new pension). He said that this simple process did however mean that the tax deducted would not always match the actual tax due, taking account of the recipient’s total income. He said it is HMRC’s responsibility to ensure the right amount of tax is paid, and to make repayment or seek further payment as appropriate. SD explained HMRC are aware that many people receiving trivial commutation payments will be on low incomes and have little experience of dealing with the Revenue. HMRC is developing a quick simple process for TrC recipients to claim refund of any overpaid tax, without having to wait for the end of the tax year. SD asked for industry assistance to help get the message out to TrC recipients about the new repayment claims procedure He distributed copies of a draft message that HMRC wants schemes/insurance co’s to give out with the form P45 when making TrC payments.

AP 083 PIWG members to let SD have any comments on the suitability or practicality of delivering the message and using the draft wording provided.

SD confirmed that these individuals would not normally be asked to complete an SA return.

It was asked whether or not providers making the payment could also include the repayment claim form when writing to the member.

AP 084 SD to advise whether or not the repayment claim form could be sent with the notification of the trivial commutation payment to the member.

AP 085 SD to produce more polished version of TrC note, for publication on next available Simplification Newsletter.

7. Industry Survey

JBM went through the results of the latest industry survey. She said that full details would be provided in the next newsletter. The next survey would be run in January/February.

8. AOB

Concern was raised over a recent meeting between some members of the PIWG and the IHT team that their comments were not being listened to. MW noted that his team had not been present at the meeting but the strong views of PIWG members had been understood and MW would ensure that they were relayed to those dealing with the IHT issue.

MW thanked everyone for attending and their contributions.

The next meeting of the Pensions Industry Working Group will be at 2.00pm on 17th January in Room 2/18, 100 Parliament Street, London.