Posts Tagged ‘Legislation’

Alan Collins

If they had a competition to name this Green Paper, they’d call it Dampy MacSquibface.

The much-anticipated pensions Green Paper in response to the demise of BHS dropped into the industry’s inbox yesterday.

It contains many more questions than answers, saying no to lots of things and yes to nothing.  If this was a squib, it would be very much of the dampest kind. Dampy MacSquibface if you like.

The bluster of the Work and Pensions Committee is nowhere to be seen.  The Paper is littered with phrases like “we do not feel there is sufficient evidence”, “all of these options have significant drawbacks”, “we would need to be certain” and “it would not be appropriate”.  The world of pensions is slow enough to change – do we really need yet another agnostic consultation? Read more »

Emer Cox

Cabinet reshuffles. Turmoil in the financial markets. The pound tumbling against the dollar. Not to mention, real concerns about Britain’s Eurovision future!  We have witnessed a lot since the EU referendum.

Trustees have already felt the impact of Brexit, with their defined benefit pension scheme deficits climbing as gilt yields have fallen to record lows. In truth, it isn’t surprising that the financial markets experienced significant turmoil in the face of such economic uncertainty.  As a result, the value of Sterling in relation to other currencies has plummeted to its lowest point in over two decades, having fallen 12% against the dollar. Read more »

David Davison

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.

Alan Collins

This week, George Osborne kept up his pension reform theme and proposed the abolition of the so called “death-tax” on pension pots.

In doing so, he has further tipped the pension balance away from collectivism and defined income towards flexibility and individualism.

Summary of proposed changes

The changes only affect money purchase/defined contribution arrangements.  There are no changes proposed for final salary/defined benefit schemes.

Also, pension pots above the Lifetime Allowance will be subject to the same tax system as before.  That is, the excess above the Lifetime Allowance is taxed at 55% if taken as a lump sum (or 25% if taken as income, in which case income tax is levied in addition).

Currently, an “untouched” pension pot can be passed to a dependant free of tax if the deceased individual is under age 75.  If the deceased individual is 75 or over, the pot is subject to a 55% tax charge.

For pension pots that have already been accessed (i.e. the deceased has taken payment from the pot), the remaining pot is currently subject to a 55% tax charge irrespective of the age of the deceased (unless the beneficiary is a spouse/child less than 23, in which case there is no immediate tax charge, but (marginal rate) income tax is payable on any income received).

Come April 2015, the above will change radically:
•    Untouched pension pots will be passed on free of tax at all ages;
•    Pension pots that have been accessed will be passed on completely free of tax if the deceased is under 75; and
•    If the deceased is 75 or over, pension pots that have been accessed will be passed on with no immediate tax charge, but (marginal rate) income tax is payable on any income received.

What are the likely consequences?
Well, it is certainly trying to kill off collectivism by stacking all the cards in favour of an individual approach.  What are the chances of someone saying “Happy to join this group scheme and pass on my assets when I die to a bunch of random individuals instead of my wife and kids”?  Not likely, not likely at all.

We have had long debates in the office about the merits or otherwise of Collective Defined Contribution (CDC) schemes.  However, I suspect this may now be academic.  This is already a popular move and if it gets people more into the habit of pensions saving, then that in itself must be a good thing.  Like it or not, people will generally want to put themselves and their family first before they look to share their wealth for widely.  As such, employers are likely to keep away from CDC and focus on arrangements that will be more appreciated and valued by employees.

The further attractiveness of money purchase arrangements should also provide encouragement to employers seeking to manage their legacy defined benefit pension liabilities.  Employers should also review existing arrangements to make sure they are best aligned with the new pension freedoms.

 

Alan Collins

Now that some of the dust has settled from the Government’s long-anticipated launch of their white paper on state pension reform, the implications for employers may be far reaching and may act as a catalyst for further changes in employees’ benefit packages. So, what will this change mean for employers? Read more »

David Davison

The winding up of People Can, which provided homelessness support services on behalf of several English local authorities, has shocked the voluntary sector and led it’s former Chief Executive, Maff Potts, to issue an impassioned plea for change . There is a concern that the People Can scenario could be replicated across the sector with hundreds of organisations being driven in to administration by their pension liabilities.

This is an issue I’ve raised consistently over the last number of years and have made some comments on the potential impact in an article by Patrick Butler in the Guardian.

Admin

Spence and Partners are delighted to host a perspective of the age discrimination case of Seldon vs Clarkson Wright & Jakes by Burness solicitor Jennifer Skeoch. The case considers the issues of enforcing retirement on employees when they reach the age of 65.

On 25th April 2012, the Supreme Court handed down an eagerly awaited judgment in the case of Seldon -v- Clarkson Wright & Jakes. The headline news is that the Supreme Court dismissed Mr Seldon’s appeal and, in doing so, confirmed that a mandatory retirement age contained in the law firm’s partnership agreement could be objectively justified. Read more »

David Davison

Raithatha v Williamson [2012] EWHC 909 (Ch) (4 April 2012)

In an amendment to the Reform and Pensions Act 1999 (WRPA 1999), the High Court has ruled on the issue of income payments orders (IPO’s) in a decision that will impact upon bankrupts who have a pension and are over the age of 55. Until now an individual yet to draw their pension was protected from an IPO, which may now no longer be the case. As a result of this amendment, trustees in bankruptcy will have a significantly enhanced ability to influence an individual’s pension rights while, equally, individuals in bankruptcy face losing control of their own pension pot. Read more »

Neil Copeland

1988 and all that

1988. Lawrie Sanchez scored the winner as the Wimbledon Crazy Gang beat the then League Champions Liverpool in the FA Cup final, Phil Collins topped the charts with A Groovy Kind of Love and teenage boys everywhere were confused by their adolescent hormones generating an unhealthy interest in a cartoon Rabbit called Jessica. It was indeed the best of times and it was indeed the worst of times.

The Tories were in power, then as now, and believed in individual freedom and individual choice. You could choose to buy your council house, choose to get on your bike and, thanks to a reform introduced that year, choose not to join your employers pension scheme and instead take out a bright new shiny personal pension. Read more »

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