The Week In Pensions provides you with a digest of the most important developments in pensions law and regulation along with highlighting some of the most interesting stories from the pensions industry and national press.
In The Week In Pensions this week:
- the Pensions and Lifetime Savings Association publishes guidance for trustees on the preparation of implementation statements;
- HMRC releases statistics showing decreases in both flexible payments and transfers to qualifying overseas pension schemes (QROPS); and
- HMRC publishes Pension Schemes Newsletter edition number 122, with a reminder for scheme administrators to issue annual allowance pension savings statements where applicable.
And, in the pensions industry and national press:
- The House of Commons’ Work and Pensions Committee opens up its focus on pension freedoms and protection for savers with a review of pension scams;
- statistics revealing a fall in the level of pension withdrawals during the COVID-19 crisis; and
- ESG news from Nest as it pledges to divest from fossil fuels as part of moves on climate change and responsible investment.
Watch the video update
Pensions legal and regulatory developments
PLSA publishes guidance for trustees on preparation of implementation statements
The PLSA’s guidance is intended to help DB and DC trustees ‘navigate requirements to publicly disclose their investment and responsible investment activity’ over the previous year in an implementation statement.
The PLSA’s guidance offers ‘practical, step-by-step support for trustees’ and is aimed at helping them to produce ‘meaningful and relevant disclosures’. It also sets out what the PLSA considers to be the key guiding principles that trustees should follow when preparing implementation statements.
Just a reminder that the requirement to produce an implementation statement applies to “relevant schemes” (broadly, money purchase schemes with 100 or more members) from 1 October 2020 and to defined benefit schemes from 1 October 2021.
HMRC releases statistics showing decrease in flexible payments and payments to QROPS
HMRC has published its latest official statistics on flexible payments from pensions and transfers to qualifying recognised overseas pension schemes (QROPS). According to the figures, 340,000 individuals withdrew a total of £2.3 billion from pensions flexibly during Q2 2020, a decrease of 17% from the £2.8 billion withdrawn in Q2 2019. On QROPS, the downward trend in the number of transfers continued this year, from 5,000 transfers in 2018/19 to 4,400 in 2019/20. A total of £550 million was transferred into a QROPS during 2019/20, the fifth consecutive annual decline in the value of transfers from a peak of £1,760 million in 2014/15.
- Click here for the statistics on flexible payments from pensions; and
- Click here for the statistics on transfers to QROPS.
HMRC publishes Pensions Schemes Newsletter 122
HMRC has published edition 122 of its regular Pension schemes newsletter. In the latest edition HMRC reminds scheme administrators to issue annual allowance pension savings statements for the 2019/20 tax year by 6 October 2020 to all members whose pension savings exceeded the annual allowance during the tax year.
Highlights from the pensions industry and national press
Work and Pensions Committee launched probe into pension freedoms and protections for members
The House of Commons Work and Pensions Committee has announced it will focus on scams in the first stage of its three-part inquiry into the impact of pension freedoms and level of protection for pension savers. The committee announced on Tuesday that its “broad inquiry” will investigate how savers are protected as they move from saving for retirement to using their pension savings under freedom rules. The inquiry will first focus on pension scams, before moving on to looking at accessing pension savings and saving for later life, with a call for evidence expected to be published next year.
Pension withdrawals during Covid-19 decrease by 42%
The number of employees making pension withdrawals as a flexible income in April 2020 has decreased by 42% during April 2020, in comparison to April 2019, according to research by the Association of British Insurers (ABI). The research found that in April 2019, compared to April 2020, queries from customers about their pensions fell by 32%. The number of employees taking only a tax-free lump sum has also decreased by over half (53%). Additionally, the number of those withdrawing all of their pension in one lump sum has fallen by 30%, while employees buying a guaranteed income for life has fallen by more than half (56%).
NEST begins fossil fuels divestment
The UK’s biggest pension fund by membership, the National Employment Savings Trust (Nest) scheme is to begin divesting from fossil fuels in what climate campaigners have hailed as a landmark move for the industry. Nest currently has 9.1 million members and £9.5 billion assets under management (AUM) (up from £5.7 billion AUM last year. Nest will ban investments in any companies involved in coal mining, oil from tar sands and arctic drilling.
About the author(s)
Ian is a London-based professional support lawyer (PSL) legal director. Ian is a member of our pensions and combined human resource solutions (CHRS) teams. He works with clients to solve their employment and pensions law issues. Ian maintains a particular focus on 'crossover' issues that benefit from his understanding of both areas of law.