The Pensions Regulator (the “Regulator”) has announced that it will not now consult on a revised defined benefit (“DB”) funding code of practice until late summer 2022.
The Regulator’s current code of practice on DB scheme funding came into force in 2014. In 2020, the Regulator carried out the first of
The Pensions Regulator (TPR) has published a revised version of its code of practice on contribution notices. TPR has updated the code to cover the two new grounds for issuing a contribution notice – the employer insolvency and employer resources tests. The updated code came into force on 25 November.
Continue Reading Contribution notices – updated Pensions Regulator code of practice
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
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 government has set the automatic enrolment earning figures for the 2021/22 tax year as follows:
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
On 25 June 2020, the Corporate Insolvency and Governance Bill (the “Bill”) received Royal Assent and on 26 June 2020 CIGA came into force. The restructuring team in Mayer Brown’s London office have previously commented on the different elements of the Bill in a series of blog posts and podcasts. CIGA was swiftly followed by the introduction of The Pension Protection Fund (Moratorium and Arrangements and Reconstruction for Companies in Financial Difficulty) Regulations 2020 (the “Regulations“), which came into force on 7 July and were subsequently amended yesterday on 23 July. Now that CIGA is in force, we take a closer look at the legislation from a pensions perspective.
Continue Reading The UK Corporate Insolvency and Governance Act 2020 (“CIGA”) from a Pensions Perspective
On 15 October, the eagerly awaited Pension Schemes Bill (the Bill) had its first reading in the House of Lords. Whilst the Bill addresses the launch of collective defined contribution (or CDC) pension schemes and includes provisions enabling pensions dashboards, employers will be particularly impacted by the new requirement on trustees to produce a funding
The possibility of a Pensions Bill in the next parliamentary session should provide clarity on the funding framework for defined benefit (DB) schemes.
The Government’s white paper in March 2018 proposed that the Pensions Regulator should issue a revised code of practice focusing on how prudence is demonstrated when assessing scheme liabilities, appropriate factors for recovery plans, and ensuring that a long-term view is considered when setting the funding objective. Some or all of the funding standards contained in this revised code would be given statutory force.Continue Reading DB scheme funding: all about the long-term
The government has given the green light to a new form of defined contribution pension scheme. At least, it is new to the UK. “Collective defined contribution” (“CDC”) schemes are common in the Netherlands and Denmark but the idea of introducing this type of scheme into the UK has only relatively recently gained traction. The fact that the Royal Mail wants to put such a scheme in place for its 140,000-strong workforce has provided the impetus for the government to consult on how CDC schemes would operate and be regulated.
Continue Reading Collective defined contribution schemes: a fresh alternative?
On 6 April, the quality requirements that pension schemes being used for automatic enrolment (“qualifying schemes”) must meet are changing.
DC schemes – what’s changing?
At present, for a DC scheme to be a qualifying scheme: