Many charities participate in pension schemes that are contracted-out. Participants in local government pension schemes, multi-employer schemes such as those run by the Pensions Trust, USS and many others will be impacted, as well as those charities running their own defined benefit schemes.
So what’s happening? Contracting-out of the second state pension will be abolished from 6 April 2016, to coincide with the introduction of the new state pension. This will increase the national insurance contributions (NIC) required from employers currently offering a contracted-out scheme, as well increasing the contributions required from employees. Employers will see an increase in contributions of 3.4% of band earnings (earnings between £5,824 and £43,004 for the 2016/17 tax year) on their pensionable payroll and employees an increase of 1.4% of band earnings. Read more »
It is that time of year where it is traditional to reflect on the last twelve months and look forward to the year ahead. It would be nice to say that is has been a relatively calm year in the world of pensions. However, I think we can all agree, that despite the slow start, 2015 was a bit of a pensions whirlwind.
This year, it was up to me to take a closer look at the impact 2015 has had on your pension schemes, from pensions liberation and DB to DC transfers, to budget announcements and court case proceedings.
For your convenience we’ve created this short update, highlighting everything you need to know, and how these events could affect your scheme. Download your copy of ‘2015 – A review of the year’ here.
The article below appeared in Pensions Expert on 23 November 2015, in the Informed Comment section of the publication.
The Chancellor George Osborne’s recent announcement that the Government’s objective to see the living wage increase to £9.00 by 2020 will have had many charity finance directors scratching their heads and wondering where the extra income is going to come from to fund this.
I suspect however that many will not as yet have got around to considering the pensions impact of the change, which for some will be very significant. Read more »
David Davison this week presented at the CFG Risk Conference on Changes in Pensions. With the new Government in place, the way we view pensions is changing. There are now opportunities to transform pension plans into more flexible and attractive benefits for employees, whilst reducing the costs and risks of pension provision for employers.
This session explored the practicalities of how this works, giving useful tips on how to make the most of pensions and also highlighted new issues to be aware of. You can view the slides here – CFG Presentation London November 2015 [Read-Only].
A change in practice by local government pension scheme Lothian Pension Fund (‘LPF’) outlined in a recent Bulletin has finally looked to rectify a long standing anomaly with pension schemes of this type.
Many charities joined LGPS as a result of outsourced arrangements from local authorities or other public bodies. These arrangements resulted in the transfer of staff from the local authority and allowed these staff to continue their pension provision.
Unfortunately Funds were unable to segregate the service for these individuals between the two employing bodies which meant that the later employer, usually a charity, inherited all the liabilities. Read more »
Spence & Partners, the UK pension actuaries and administration specialists, today shared their concerns that more charities will become trapped in multi-employer pension schemes with damaging liabilities unless government amends Section 75 legislation.
In March of this year, the Department for Work and Pensions (DWP) were seeking views on the operation of the employer debt regime for non-associated multi-employer defined benefit schemes in a call for evidence which closed in May. As of yet no proposals have been made and the DWP website warns that it was published under the Coalition government and therefore might not be a priority for the current regime. Read more »
The Pensions Regulator has produced 65 pages of guidance for pension scheme trustees and sponsors on assessing and monitoring the employer covenant. We have provided some generic guidance via the attached link – TPR’s guidance on assessing and monitoring the employer covenant.
Helpfully in Appendix B and C from pages 54 onwards there is specific guidance for not for profit organisations. The key recommendation is that commercial operations and donations need to be considered independently with the guidance providing examples where donation income represents a low and high proportion of overall income. Read more »
Spence & Partners latest blog for Pension Funds Online –
Many charities participating in local government pension schemes (LGPS) have been increasingly frustrated by the lack of recognition of the issues they face by the schemes and indeed the Department for Communities and Local Government (DCLG) who oversee them.
The issues are not new but there remains an element of denial and finger pointing and it’s very easy to see how charities could be frustrated. Read more »
In March 2015 the Department for Work & Pensions launched a call for evidence on ‘Section 75 Employer Debt in Non-Associated Multi-Employer Defined Benefit Pension Schemes’. This is a once in a generation opportunity for charities to influence government to get legislation which is seriously damaging charities financial viability. I therefore would urge charities who participate in schemes of this type to make their views known to the DWP. I’ve included a link to an article I’ve written on Civil Society Online and our response to the Consultation which should hopefully help charities with their responses. The consultation closes on 22nd May 2015 so not much time left.
“Déjà vu all over again” is a famous quote attributed to famous baseball manager Yogi Berra which must perfectly describe how England and Wales social housing organisations must be feeling following the publication of the results of the 2014 valuation for the Social Housing Pension Scheme (“SHPS”). The results show that the ‘on-going’ funding deficit has increased from £283m in 2005 to £663m in 2008 to £1,035m in 2011 and now £1,323m at 2014. I’ll not mention the current position which would be even worse!!
In the face of further increased future contribution costs and further future risk exposure, organisations may now be considering what options are open to them. Read more »