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Pensions Bulletin 2017/41

Pensions & benefits

PLSA calls for DB consolidation via Superfunds

In its final report, the Pensions and Lifetime Savings Association’s DB taskforce suggests that consolidation across the defined benefit landscape is necessary in order to maximise the chance of scheme members receiving their benefit promises. This it suggests is best done through its Superfund concept, more details of which it has set out.

The report contains three main recommendations:

  • A new Chair's statement for DB scheme trustees, provided annually, to demonstrate that a scheme is operating in line with best practice in areas such as governance, investment performance and cost transparency
  • Government action to make it easier for DB schemes to standardise and simplify benefits
  • The development of a regime that supports greater scheme consolidation, realising the potential benefits of “covenant monetisation” through the taskforce’s Superfund idea in which scheme sponsors, instead of seeking to repair their schemes’ deficits over time, pay a higher amount, possibly also over time, in order to be released from their DB obligations


There are of course, consolidators currently operating across the DB landscape – most notably the Pension Protection Fund for failed employers with underfunded schemes and a number of insurers participating in the buyout market. Whether the Government should now encourage a third type, which would likely operate inbetween the PPF and insurers and, as a separate step towards this, make it easier for schemes to simplify their benefits, are two of the key issues on which the forthcoming White Paper will hopefully provide some direction.

If the Government does warm to the Superfund concept it must ensure that they are appropriately regulated from the outset – just as Master Trusts (the equivalent to Superfunds in the DC space) will shortly become.

HMRC launches the scheme administrator LTA look-up service

After much delay, HMRC has announced, via its latest Pension Schemes Newsletter 91, that the lifetime allowance scheme administrator look-up service has now been launched.

Scheme administrators can now carry out a check on the current LTA protection status of a member using this service which can be accessed via the “Pension administrators: check your member’s protection status” guide. To enable this, the member will need to give the scheme two reference figures relating to the protection – a “protection notification number” and a “scheme administrator reference number”. HMRC asks for feedback on the design.

On the annual allowance (AA) front, with the processing of 2016/17 information and charges on many administrators/members minds currently, HMRC spells out the circumstances in which administrators must issue 2016/17 AA pension savings statements by 6 October; and asks schemes to remind members that if they have a charge they must declare this on their self-assessment tax return and arrange its payment. HMRC points to its own “annual allowance calculator” to assist in this, but acknowledges that this has an error relating to the carry forward of unused AA from 2012/13 beyond 2015/16, which it promises to fix as soon as possible.

Other topics covered by Newsletter 91 include:

  • More information about the operation of relief at source for Scottish Income Tax, the information exchange involved and the imminent publication of updated repayment claim forms
  • Further requests in relation to cleaning scheme data ahead of the transfer to the new pensions online service (see Pensions Bulletin 2017/37) and an invitation to volunteer for user research; and
  • Confirmation that the Accounting for Tax Return for the quarter ending 30 September 2017 can now accommodate taxable overseas transfers, and should also be used to report such transfers made between 9 March 2017 and 30 June 2017


The LTA protection look-up service is easy to run, but only gives a “current status” of the protection represented by the reference numbers. It does not show the member identity. It also does not show protection history. Given these limitations, when scheme administrators check whether a LTA charge is due as they put benefits into payment, the look-up is probably an additional step rather than a replacement for existing processes. Any enhancements to the look-up would be welcome!

FCA expresses concern at the quality of DB transfer advice

As the Financial Conduct Authority considers responses to its consultation on DB transfers, which closed on 21 September (see Pensions Bulletin 2017/26), it has published its findings from some work undertaken with advisory firms that operate in this space – both specialist transfer firms and non-specialist. It reveals some clear concerns.

For example, over the past two years the FCA has reviewed 88 DB transfers where the recommendation was to transfer and found that this recommendation was only suitable in 47% of the cases – much lower than found in the wider advisory market for pensions advice (such as that relating to pensions accumulation and retirement income). And where the suitability of the recommended product and fund was assessed the FCA found that only 35% of such recommendations were suitable.

A further issue is the disconnect that can arise where one firm advises on the investment in the destination scheme whilst a specialist pensions transfer firm advises on the transfer.

The FCA also states that over the last two years it has reviewed the DB transfer business of 22 firms with the result that four firms have “chosen” to stop advising on DB transfers.


The FCA’s findings make for alarming reading. As the number of individuals transferring their DB rights into a DC arrangement continues to grow, it is not surprising that this has brought the issue of the quality of the transfer advice into focus. If there is a mis-advising scandal brewing we can only hope that the FCA is taking the necessary action to stop it.

“Instant” pension duties start for new businesses

The Pensions Regulator has issued a new suite of information and tools to help newly set up businesses meet their auto-enrolment duties.

It has also issued a press release stating that start-up businesses from 1 October “have a legal duty to put staff straight into a workplace pension as soon as they employ them” and that “providing a workplace pension is now the business norm”.


The press release conveniently overlooks one aspect of the underlying legislation. In common with employers who since 2012 have been “staged” into the auto-enrolment duty, newly established businesses are able to defer their duty for up to three months.

This Pensions Bulletin does not constitute advice, nor should it be taken as an authoritative statement of the law. For further help, please contact David Everett at our London office or the partner who normally advises you.