2015 has seen significant changes and with more expected next year, you need to make sure your knowledge and understanding of the pensions landscape is up-to-date.
We outline the key points you should be reviewing before 2016, making sure that you are on track to meet all your compliance and governance requirements.
The power to pay surplus funds to a participating employer lapsed on 6 April 2006. If your scheme rules included this power before 6 April 2006 then Trustees are currently able to pass a resolution to revive it, providing they are satisfied it is in members' interests.
This process will no longer be available after 5 April 2016 and must be started by 5 January 2016 at the very latest. For more on this, read our briefing.
Members who joined a DC scheme on or after 1 October 2015 will acquire vested rights in the scheme after 30 days' pensionable service. These rights may be maintained or transferred when they leave the scheme.
This change does not override scheme rules, so schemes may need to update references to eligibility requirements for short service refunds, and reduce any opt-out period following contractual enrolment to 30 days.
Administrators must ensure that refunds are not offered or paid except in appropriate cases, to avoid making unauthorised payments.
Schemes affected by the end of DB contracting-out on 6 April 2016 should act soon if the scheme sponsor plans to offset the consequent increase in payroll costs, either by using a specific statutory power or via a scheme rule amendment. A 60-day member consultation period may be required in relation to proposed changes.
Trustees of schemes that provide guaranteed minimum pensions in relation to pre-April 1997 contracted-out service need to consider their approach to reconciling scheme data with HMRC records.
This process may identify members wrongly attributed to the scheme by HMRC. It may also reveal historic or on-going under or overpayments which may need to be rectified. Register by 5 April 2016 to obtain data from HMRC.
Changes to the annual and lifetime allowances will take effect from 6 April 2016. The annual allowance will be tapered away for earners with income (including employer pension contributions) in excess of £150,000. In addition, the lifetime allowance will be reduced to £1 million.
Trustees should consider communicating with potentially affected members about the April 2016 changes to the annual and lifetime allowances. Scheme sponsors may wish to consider the impact these changes will have on their employees.
If you have any queries regarding these issues contact Richard Leigh on +44 (0)333 006 0212 or richard.leigh@TLTsolicitors.com
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at December 2015. Specific advice should be sought for specific cases. For more information see our terms & conditions on www.TLTsolicitors.com