The Pension Schemes Act 2021 introduces a framework for a new type of pension scheme – collective money purchase schemes. Also known as collective defined contribution or CDC schemes, this type of pension scheme offers a middle path between traditional defined benefit (DB) and defined contribution (DC) schemes.

Employer and member contributions are fixed, as in a DC scheme. However, investment and longevity risks are borne collectively by the members, rather than being borne exclusively by the employer (as in a DB scheme) or exclusively by the individual member (as in a DC scheme). Members are promised a target retirement income, but this can be adjusted up or down to reflect the scheme’s investment performance and other risks as longevity experience.

The government is currently consulting on draft regulations setting out further detail of the legal framework for CDC schemes. The consultation closes on 31 August.


Continue Reading A third way – collective money purchase pension schemes

DC consolidation has been on the Government’s agenda for some time. Now the DWP has published a call for evidence, suggesting that the push to consolidate will be ramped up.

Consolidation involves winding up small DC arrangements and moving active members and accrued DC pots to larger schemes. Typically the chosen destination will be a master trust – a multi-employer occupational pension scheme which operates on a commercial basis. Master trusts are subject to an authorisation and supervision regime run by the Pensions Regulator.


Continue Reading DC consolidation: large is beautiful?

HMRC has published information on the use of unfunded pension arrangements which are set up in an attempt to avoid corporation tax, income tax and National Insurance (“NI”) contributions.

If you think you have put in place such an unfunded pension arrangement, or are considering setting up an unfunded pension arrangement in the future, you may find the information helpful in understanding the tax treatment that will be applied to that arrangement.


Continue Reading Disguised remuneration: HMRC information on tax avoidance using unfunded pension arrangements

The Pensions Regulator has published its annual funding statement for occupational defined benefit (“DB“) pension schemes.   The statement is relevant for trustees and employers making decisions on scheme funding. It provides wider guidance on covenant monitoring due to the impact of COVID-19 and climate change risks. It highlights the need for employers to

The pensions press has been abuzz with comment on the expanded range of powers given to the Pensions Regulator (“TPR“) by the Pension Schemes Act 2021 (the “Act“) which are expected to come into force in Autumn 2021.  These include imprisonment or unlimited fines for some offences, civil penalties of up to £1 million and enhanced information gathering powers with penalties for non-compliance.

Continue Reading New powers for the Pensions Regulator – should employers be concerned?

The government has set the automatic enrolment earning figures for the 2021/22 tax year as follows:

  • Earnings trigger: £10,000
  • Qualifying earnings band: £6,240 – £50,270

The earnings trigger is the level of earnings that a jobholder must receive in order to be eligible for automatic enrolment. The level of the earnings trigger has remained unchanged

The anticipation is over! The Pension Schemes Act 2021 received Royal Assent and became law on 11 February. The Act aims to enhance the security and sustainability of pensions in the UK, and to protect defined benefit (“DB“) pension schemes. The Act makes some significant changes to the pensions world, most of which will be brought into effect and fleshed out through Regulations and guidance from the Pensions Regulator (“tPR“). This blog briefly sets out the key provisions of the Act from an employer’s perspective.
Continue Reading The Pension Schemes Act 2021 – What employers need to know

The COVID-19 pandemic has brought with it many challenges. One of the challenges faced by businesses has been how to work around the social distancing restrictions that have existed in various forms over the course of 2020. In this post we briefly explore one aspect of this – whether, and how, documents may be signed electronically.

Continue Reading Electronic signing in a COVID world and beyond