May made for interesting times in the pension world, with The Pensions Regulator (TPR) taking a hard line on compliance and HMRC bending a little to help the industry get things done. Bhavna Baines of Barnett Waddingham takes a brief look at some of the key pension topics for the month.
HMRC: Countdown Bulletin 45 – the clock briefly turns back
In an incredibly welcome turnaround, mid-May’s Countdown Bulletin 45 confirmed an extension to the previously expired deadline for payment of contracted-out equivalent premiums (CEPs). These tiny jewels in the GMP reconciliation crown allow GMP liability to be extinguished and State Pension reinstated for members with service under 2 years (or under 5 years in more historic cases).
Most of these members will have received a refund of contributions decades ago but, somehow, something fell out of the paper trail, maybe at the scheme side, maybe at HMRC’s, and the GMP wasn’t properly extinguished at the time. Much to their own surprise, when the GMP reconciliation data from HMRC first turned up, most schemes found themselves carrying tiny amounts of GMP liability for people they had literally no record of.
With Bulletin 45 extending the deadline to 4 June, we saw 2 weeks of fairly feverish activity across the industry as schemes rushed to submit their final requests. Inevitably there will still be cases where boats have been missed and schemes are still left saddled with rogue GMP benefits, however, with GMP equalisation adding even more urgency to the need to get these records absolutely right, even this short extension to the deadline was hugely helpful.
HMRC pension schemes newsletter 110
As life isn’t complicated or busy enough for pension schemes, HMRC also published pension schemes newsletter 110 which covers a range of topics including:
A consultation on the steps – the Government proposes to meet the UK’s expected obligation to transpose the fifth money laundering directive into national law. This includes a proposal that all UK resident express trusts, which will potentially cover most registered pension schemes, will be required to register with the Trust Registration Service. With the consultation due to close on 10 June, further updates will be announced on the ever increasing spiderweb that is pension scheme compliance.
TPR news – compliance and enforcement bulletin – no more Mr Nice Guy
In other news, May also saw TPR publish the latest edition of its quarterly compliance and enforcement bulletin, in which the Regulator provides an overview of how it used its powers between January and March 2019. This unassuming collection of pension crimes and misdemeanours across 4 cases studies should be required reading for anyone involved in pensions.
Several major outcomes during this quarter include:
• the first fraud conviction
• the first conviction for making prohibited employer related investments
• the first custodial sentence resulting from TPR prosecution
• the first time TPR have appointed a trustee to a scheme primarily because of a lack of competence amongst existing board members.
Senior Technical Analyst – Barnett Waddingham