|Here is our round-up of current issues and viewpoints from December.
New Transfer Regulations -Now in force:
From 30th November, new regulations are in force that must be satisfied before a member has a statutory right to a transfer value. Trustees must ensure that transfer requests meet one of the specified ‘conditions’ before the transfer can proceed. One of the conditions requires Trustees and their scheme administrators being aware of certain ‘Amber’ and ‘Red’ flags. If an Amber flag is identified, transfers cannot proceed until the member has taken advice from MoneyHelper. If a Red flag is identified, the transfer cannot proceed as there is likely to be a high risk of them losing their pension savings to a scam. We have prepared a special briefing note, including confirmation of Atkin Pensions procedures to assist Trustees in ensuring that members do not fall prey to a pensions scam. TPR has issued guidance, which can be found here: TPR – Dealing with transfer requests
Contribution Notices – TPR Code of Practice:
Trustees and sponsors will be aware that TPR’s powers to issue Contribution Notices have been extended and strengthened. TPR has the power to issue a Contribution Notice where an act, or failure to act, has a detrimental effect on employer resources, or on the return to the pension scheme in the event of an insolvency (even if an insolvency has not, or does not, take place). TPR has issued Code of Practice 12 which sets out the circumstances in which they expect to issue a Contribution Notice, where they believe the material detriment test or the employer resources test has been met. The Code of Practice can be found here: TPR Code of Practice 12
Revaluation Order 2022 :
From 1st January, the revaluation percentages that will be applied to deferred pensions, in excess of GMP, will be 3.1% for pre 6th April 2009 pensionable service and 2.5% for post 5th April 2009 pensionable service.
DB Consolidators – First to meet TPR standards announced
Clara has been confirmed as the first DB Consolidator (or superfund) to meet the tough standards of governance and administration set by TPR. The announcement means that there is now an alternative option for scheme sponsors to discharge DB pension schemes. However, TPR has indicated that it will only authorise a transfer to a superfund, like Clara, if there is no realistic route to achieving an insured buy-out over the short or medium term.
Pension cold- caller – ICO issues fine:
The ICO has issued a fine of £140,000 to EB Associates Group Ltd for instigating more than 100,000 illegal pension cold-calls. EB Associates had asked lead generators to make calls on its behalf, despite cold-calls being banned in 2019. This highlights the importance of continual, updated warnings to members about cold-calls and pension scams.
Increased auditor scrutiny:
As we approach the end of the year many companies will be carefully watching equity values, bond yields and inflation indices to see where their year end pension balance sheet position will be. This year there is the added complexity of increased auditor scrutiny over the disclosures prepared by the Company’s actuary. The accounting standard ISA:540 relates to auditing accounting estimates and auditors will be looking at the whole process of how balance sheet numbers are arrived at rather than just checking the assumptions and reasonableness.