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Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

Pensions Related News etc. to 13 January 2017 The following is a summary of points of interest relating to pensions in general of the last week or so.

This document includes a short multiple choice set of questions at the end, so you can use this as a

part of your CPD.

Consultation on changing the regulation of small self-administered pensions schemes The government opened a consultation on tackling pension scams.

The consultation looks at several areas such as a ban on cold calling and limiting the right to take a

transfer. One proposal is to amend the requirements for small self-administered pensions schemes

(SSASs) to minimise their use by fraudsters. This may have implications for legitimate SSASs.

The government is worried that SSASs are open to abuse as vehicles for pension scams. Single-member

schemes are of a particular concern because:

there is no requirement to register with the Pensions Regulator (TPR),

they can be HMRC registered, opening the door to a recognised transfer,

the scheme employer can be a dormant company,

the only person party to all decisions is the person being scammed, and

following A-Day, there is no requirement for a professional trustee.

TPR believes that SSASs are being marketed as giving unrealistic returns but will instead leave the

beneficiaries at risk of tax charges and extortionate fees from the fraudster.

Despite previous reforms, such as moving away from automatic acceptance of an application to

register, the government would like to improve the protections in place.

The Consultation

At this stage, the government is only seeking views on whether additional steps should be taken to

prevent SSASs being used as vehicles for pension scams through increased regulation or further

restrictions.

The government is also proposing to prevent the registration of pension schemes for dormant

companies. This would affect all occupational schemes but will also be relevant to SSAS practitioners

who specialise in providing services for small businesses.

There are legitimate reasons for a company to be dormant but the government feels that there are

few reasons why a dormant company will want to register a new pension scheme if there is no on-

going trading activity. The government is seeking views on whether all new scheme registrations must

be made through an active company. If not, respondents are asked to discuss the legitimate

circumstances in which a dormant company might want to register a new scheme.

Implications

The government believes it is unlikely that many (if any) legitimate schemes are being established by

dormant companies but if any are then trustees and providers will need to ensure they make these

circumstances known.

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Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

SSAS providers may also face increased regulation and restrictions with an obvious effect on expenses

and administration. Changes to systems and processes may be needed to ensure that these remain

compliant.

Increased emphasis on preventing pension scams will also mean that trustees are placed under more

pressure to carry out more detailed due diligence on investments and to ensure that members asking

to transfer their benefits are aware of the dangers of scams and what the warning signs are.

It is easy to speculate where changes could be made. A system of professional trusteeship along the

lines of pensioneer trustees with co-signatory and co-ownership requirements may not be too

controversial. Also, industry may be happy to accept a permitted investment list along the lines of that

which applied to self-invested personal pensions before A Day.

More difficult would be the restriction of self-investment, perhaps allowing pension schemes to invest

only in standard assets. This would undermine the business model of SSAS providers.

Alternatively, the government could choose to push the use of a master trust structure albeit with

self-investment. This will improve governance but raises the question of cross-contamination of

investment risks between employers' sections.

The consultation is due to close 13 February 2017. Trustees and providers should keep an eye on

developments and may want to reply to the consultation.

TPR issues first chair’s statement fines against master trust schemes The Pensions Regulator (TPR) has issued its first fines against several master trust schemes for failing

to complete a chair’s statement:

The trustee of Nurture Master Trust, MC Trustees Ltd, was ordered to pay a fine of £2,000 for

failing to prepare a chair’s statement for the scheme. The maximum fine of £2,000 was

imposed because the scheme had a professional trustee in place and there were no mitigating

factors.

In separate action the trustees of the Save and Prosper Funds were fined a total of £3,020

after failing to prepare a chair’s statement for three master trust schemes.

TPR has issued a regulatory intervention report about both cases. In all the schemes the relevant

trustee has now produced chair’s statements.

Trustees are required to confirm that they have completed the chair’s statement via the scheme

return. TPR is supporting trustees in numerous ways, including new web guidance and news-by-email

to help them understand how to complete the new scheme return, including confirmation of

completion of a chair’s statement, to demonstrate they are meeting new governance standards.

Nicola Parish, Executive Director for Frontline Regulation at TPR, said: “Completion of the chair’s

statement by trustees is a basic requirement of good governance and we expect trustees to comply.

We will enforce the law and impose a penalty where trustees of schemes fail to prepare an annual

governance statement signed by the chair of trustees. These requirements apply equally to trustees of

master trusts. These latest fines result from our ongoing focus on ensuring that trustees comply with

the requirements of good governance. Trustees should be aware that this type of breach will result in

a fine and we hope that our latest report will act as a reminder to all trustees, professional or otherwise,

to ensure they complete the chair’s statement fully and on time.”

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Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

Unions to meet over cuts to nuclear pensions The GMB, Prospect, Unite and ASLEF/TSSA unions met on 9 January to consider strike action over

£660m cuts to 16,000 nuclear workers' pensions. The Nuclear Decommissioning Authority (NDA) is

consulting on proposed Government cuts to DB pension benefits across 19 UK sites from today until

10 March.

Justin Bowden, GMB National Secretary for the Nuclear Sector, said in their Press Release: “There is

no justification for this attack on the pensions of these nuclear workers and their communities.... This

is a point-blank betrayal of the promises made by Margaret Thatcher to nuclear communities when

the electricity industry was privatised in the 1990s and the public sector-like pension being proposed

would make it by far the worst across the public sector.” Kevin Coyne, Unite National Officer for

Energy, said in their Press Release: “We are urging all our members working for the [NDA] to resist

this proposed Treasury-led ‘raid’ on their pensions - if it is allowed to go ahead thousands of workers

will see their retirement incomes slashed by thousands of pounds.”

In Press Releases, both unions have now announced intentions to hold strike ballots:

Unite Press Release of 9 January 2017

GMB Press Release of 9 January 2017

PPF publishes note outlining its risk appetite The Pension Protection Fund (PPF) has published a note outlining the Board’s risk appetite, which is

the level of risk the Board of the PPF chooses to adopt in pursuit of its strategic objectives. The note

looks at the Board's attitude towards its key Strategic, Funding, Financial and Operational risks.

Millions change retirement plans post-EU vote According to a Press Release from LV=, research they have undertaken shows that 27% of people over

55 years old have changed their retirement plans since the EU referendum vote. Of those people

whose plans had changed, 30% said they will postpone retirement, opting to continue working.

Worryingly, it seems that respondents still seemed reluctant to take advice.

Aviva in talks with LinkedIn to help people locate lost pensions According to a report in The Times of 9 January 2017, Aviva is in discussions with the online networking

website LinkedIn about forming a partnership to track millions of forgotten pension pots. The insurer

is piloting schemes with LinkedIn and other companies with large numbers of digital users to establish

an easy way for people to locate pensions that they have accumulated with previous employers. Chris

Wei, Global Chairman of Aviva UK Digital, said that in 2017 “We’d like to partner with LinkedIn to

create a scheme which could be called the UK’s biggest treasure hunt.”

1.3m married couples boosted their finances in 2016 According to a Press Release from HMRC, more than 1.3 million couples across the UK have boosted

their finances with the Marriage Allowance.

However around 4.2 million married and civil partner couples are eligible for the free tax break worth

up to £220 per year. HMRC are saying why not start 2017 with a bit of a financial boost; since the start

of the new tax year in April couples can backdate their allowance and boost their payment up to £432.

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Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

Applying for Marriage Allowance is quick and easy with the online form, and with customers being

able to apply at any stage in the tax year, and still receive the full entitlement, there really is nothing

to lose.

Everyone has a tax-free personal allowance of £11,000 and no tax is due on income up to this amount.

The Marriage Allowance allows a spouse or civil partner who earns less than their personal allowance

to transfer £1,100 of it to their partner; provided their partner doesn’t pay more than the basic rate

of Income Tax.

Couples have four years to claim their backdated allowance and can apply on-line.

Pensions Regulator 'means business' on trustee standards Pension scheme trustees can expect targeted education and tougher enforcement action from the

Pensions Regulator (TPR) in 2017, as part of its efforts to "drive up standards of governance" according

to its response to its discussion paper on '21st century trusteeship'. TPR received 74 responses to its

paper from across the pensions industry, which showed widespread support for its increased focus on

driving up standards. However, most respondents called for targeted action from the regulator

towards schemes that did not meet the required standards, rather than increasing compliance

burdens for all schemes.

The regulator has now confirmed that it will begin a more targeted education programme, aimed at

raising the standards of poor trustees, from Spring 2017. It also intends to streamline its website and

guidance to make it clear what higher standards are expected of professional trustees and chairs, and

introduce tougher enforcement action against trustees who fail to meet these standards.

Lay trustees and chairs will not be required to obtain formal professional qualifications for the time

being. The regulator will instead consider whether a 'Fit and Proper' regime, including barriers to

entry, would be an appropriate way of driving up standards. It will also encourage trustees that fall

short of its required standards to consider consolidation with other small schemes, according to the

paper.

Andrew Warwick-Thompson, executive director for regulatory policy, said that the Pensions Regulator

was "not prepared to accept two classes of scheme member – those that benefit from good

governance and administration, and those that do not".

"In 2017 we will set out clearly the higher standards we expect of a professional trustee and define

what we mean by a 'professional trustee'. Further, recognising that the most effective boards have a

diversity of skills, we will continue to encourage and support lay trustees through the development of

the trustee toolkit and targeted guidance and self-help tools," he said.

The regulator will also consider whether it can do more to encourage the employers of lay trustees to

support them in their work, such as through time off for preparation and board meetings and

providing effective training, he said.

Tougher governance standards for defined contribution (DC) pension scheme trustees came into force

in April 2016. They include the need for trustees to appoint a chair, new reporting requirements and

a duty to ensure the value for money to members of scheme default arrangements, including

transaction costs and charges. The regulator said that it was already treating trustees' duties as a

priority and imposing fines on schemes that did not complete their returns or submit a chair's

statement on time.

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Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

"If trustees are unable to get even these basic legal duties right, it is likely to be symptomatic of more

serious failings, and in some cases fraud," said Warwick-Thompson.

"We have a range of powers already - the appointment of an independent trustee or skilled person,

improvement notices, and the suspension or prohibition of a trustee. We also believe that in some

circumstances scheme consolidation may be the most appropriate strategy and we are open minded

about the longer-term solutions, which is why we are so keep to engage with stakeholders and the

wider industry," he said.

ABI: Principles for obtaining medical information electronically from general practitioners ABI has published guiding principles for life insurers for use when providing cover, with input from the

Information Commissioner’s Office and the British Medical Association, which are intended to ensure

that electronic requests on the sharing of customers’ medical information securely will adhere to a

higher standard than the current paper-based system.

TPR’s New Year Message to Business Advisers The Pensions Regulator (TPR) highlights the areas that business advisers should be focusing on this

New Year:

1. New Year’s resolution to stay ahead of your paperwork?

Don't let your clients ignore the workplace pension. All employers have automatic enrolment

duties and you should make sure your clients are ready for their staging date, which is when

they’ll need to put certain staff into a pension scheme.

Encourage your clients to use TPR’s duties checker to find out exactly what their duties are,

what they’ll need to do, and by when. Help them avoid leaving their preparations until the last

minute.

2. Nobody to put into a pension scheme?

If your client has no one to put into a pension scheme, they can bring their staging date

forward to any date and declare their compliance at the same time.

Completing the declaration early means they can get this task out of the way and don’t need

to think about it anymore. See; Bringing your clients staging date forward.

3. Has a client missed their staging date?

They need to ACT NOW to avoid a fine.

TPR recognises that most employers will want to do the right thing for their staff and will work

with them if they haven’t understood their duties or have been unable to comply. However,

those who do not comply by their deadline risk a fine – TPR will use their powers where

necessary to ensure compliance.

If you have clients who are late complying or think they might be, they should tell TPR about

it straight away. For more detail, see; “What happens if my client doesn't comply?”

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Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

4. Re-enrolment: Complete the redeclaration of compliance at the same time as re-

enrolling staff. Why wait?

Every three years’ employers must put certain members of staff back into an automatic

enrolment pension scheme. This is called re-enrolment.

If you’ve chosen your re-enrolment date for your client, then put a note in your diary to

complete their re-declaration of compliance at the same time and tick both off your list in one

fell swoop. See TPR’s re-enrolment pages.

Will you be impacted by the introduction of Optional Remuneration Arrangements? During December 2016 a significant number of publications appeared on GOV.UK amongst which was

the Summary of Responses to the Consultation on salary sacrifice for the provision of Benefits in Kind

(BiKs).

HMRC also produced a briefing sheet to highlight how the treatment of items provided under a salary

sacrifice arrangement would be changing. Included in the briefing sheet was the following:

“If you provide benefits to your employees in exchange for salary sacrifice / salary

exchange or have a flexible benefits package where your employee can choose a benefit

or cash, or where you provide benefits but offer your employee a cash alternative then you

will be affected / need to know about these changes.”

We have highlighted the final section because you may not have been focussing on the detail of the

consultation because you do not enter in to Salary Sacrifice arrangements.

The draft Finance Bill 2017 refers to such arrangements (including salary sacrifice) as Optional

Remuneration Arrangements, and whilst a technical consultation is ongoing, it is clear that where

there is an element of choice between cash or a BiK, it is likely to be captured under the new rules due

to begin from 6 April 2017.

A common example could be the provision of a company car, but the employer offers a cash allowance

in the event the employee chooses to provide their own car for business purposes. Where the cash

allowance is taken there will be no impact as a result of the new rules, however once the new rules

take effect the taxable value of the benefit will be the higher of the current value of the BiK or the

cash foregone.

Guidance is expected to be published by HMRC at the end of January to help us all to understand how

these new rules will be applied.

What HMRC can find out about you According to the Telegraph, HMRC is deploying its ‘super-computer’ which holds data about

individuals which goes far beyond just income.

The report in the Telegraph (7 January 2017) says that HMRC has spent years and some £100m on a

super-computer designed to identify those who may have paid too little tax. And now; with the

deadline for filing 2015/16 tax returns just days away; the system is being fully deployed for the first

time.

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Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

The report lists the following information that HMRC can apparently find out about you:

Visa and Mastercard transactions: Anonymised information on all payments.

Land Registry records: To determine properties purchased, and stamp duty paid.

DVLA: Details of cars purchased and owned by individuals.

UK and overseas bank accounts: From this year it receives information from banks in more

than 60 countries.

Internal tax documents: Systems show council tax paid, relevant VAT registration, previous

tax investigations, last year's tax return (or absence of one).

Earnings: From any employer, including those you have worked for casually, or on an ad-hoc

basis. This includes any company benefits received. It can also access child benefit and

maintenance payments through the child support agency.

Online marketplaces: Websites such as eBay and Gumtree can be accessed to weed out

regular traders.

Social media: The Connect system can also look at public social media account information,

including from Twitter, Facebook and Instagram.

Web browsing and email records: Under the 'Snoopers Charter' HMRC will be able to access

individual's digital information.

Employee Satisfaction In a recent article (Employee Benefits of 6 January 2017) summarises results from a survey of 826

employers, 59% increased flexible working arrangements in 2016, which could help account for the

high work-life balance satisfaction of 72%.

However, in the same survey which included data from 1,752 employees, 62% of employee

respondents are unsatisfied with their benefits package.

The research conducted by GCS Recruitment for its Market insights 2017 report, also found that 38%

of employee respondents cite pay and financial rewards as having the most impact on their job

satisfaction, and only 5% list their benefits package as the most important factor.

PwC publishes Skyval Index The latest figures from PwC's Skyval Index have revealed that the deficit of the UK's DB pension funds

decreased by £20bn in December 2016, bringing the total deficit down to £560bn, still £90bn higher

than the start of 2016.

New research reveals strong support for auto-enrolment amongst SMEs According to a Press Release by B&CE, a survey conducted by YouGov on behalf of the People's

Pension has revealed that 51% of 676 small and medium-sized businesses supported changing the

rules to auto-enrol workers earning less than £10,000 per year. There was equal support for the auto-

enrolment of self-employed workers.

Richard Harrington denies ISAs are a “gimmick” to divert money from pensions During a Parliamentary debate on Monday 9 January 2017, Under-Secretary of State for Pensions

Richard Harrington denied that the Government was using ISAs as a “gimmick” to divert savings away

from pensions. Scottish National Party MP Ian Blackford criticised the Treasury's recent Ways to save

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Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

in 2017 leaflet, which failed to mention pensions (see Perspective News: Thursday 5 January 2017).

Mr Blackford said: “That is an absolute disgrace and it confirms my fears that the Government have

downgraded the role of pensions and are using the gimmick of ISAs to distract attention from

pensionable savings.” In response, Mr Harrington said he “must totally disagree” with this opinion and

cited the effort spent communicating auto-enrolment reform as “one of the great successes of this

Government”.

In the same debate, Mr Harrington said he supports the FCA's plans to deal with unfair pension charges

and said he is committed to implementing all the FCA's recommendations on how to improve price

competition in the asset management industry.

PPF 7800 Index updated According to the latest PPF 7800 Index, the aggregate deficit of the 5,794 schemes in the index is

estimated to have increased over the month to £223.9bn at the end of December 2016, from a deficit

of £194.7bn at the end of November 2016. The funding ratio worsened from 88.1% at the end of

November 2016 to 86.8%.

ONS figures reveal that the average disposable income of retired households has risen 13% The Office for National Statistics (ONS) has published figures detailing both how the sources of retired

households' incomes and the amount of disposable income available have changed over time.

According to the findings, the average disposable income of retired households has risen 13% to

£21,770 since the financial year ending 2008, when the figure was £19,262.

Church of England and Environment Agency Pension Fund launch climate change initiative According to an article in the FT.com of 11 January 2017, the Church of England's National Investing

Bodies, including its pension board, and the Environment Agency Pension Fund have led the launch of

an online tool that will assess how successfully companies deal with carbon emission risks. The

Transition Pathway Initiative will allow investors to compare the performance of the 20 largest

companies in the global oil, gas and electricity utilities sectors. Emma Howard Boyd, who chairs the

Environment Agency and its Pension Investment Committee, said: “We are going to hold investments

in many different types of companies and while we have made the decision to decarbonise, we will

want to have robust conversations with companies that do have carbon profiles to understand how

they are dealing with [carbon reduction] risks.” Adam Matthews, Head of Engagement for the Church

of England Pension Board, added: “At the very least this is something that will inform the way we

implement our investment policy on climate change.”

Only 8% of people speak to an adviser about financial decisions According to a Press Release by Aegon, research they have undertaken shows that only 8% of people

currently speak to a financial adviser about their financial decisions. This is despite previous research

which found that only 14% of people are confident about planning their retirement goals and investing

themselves. Commenting on the findings, Aegon Pensions Director Steven Cameron said: “The low

take-up of financial advice is very worrying. Greater personal responsibility for retirement planning

combined with increased levels of economic and political uncertainty, mean people need professional

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Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

financial advice more than ever. In fact there are few people who wouldn’t benefit from financial

advice at some point in their lives, especially since the introduction of pension freedoms.” Other

findings of the report included:

47% make financial decisions on their own

41% make financial decisions with their partner/spouse

ABI responds to state pension age review The ABI has welcomed the Independent Review of the State Pension Age (SPA) Interim Report. In its

response to the review, the ABI said “It is clear from the analysis in the report that the SPA should not

be considered in isolation from other aspects of the overall pensions picture. The state pension is a

foundation for saving, and SPA is an important aspect of planning for retirement.” However, the ABI

said that the triple lock is not an efficient way to avoid pensioner poverty. It added: “[A]lthough it has

been effective at gradually increasing state pension income, and this income remains uneven between

pensioners, the case for the triple lock weakens over time.”

TPR publishes automatic enrolment declaration of compliance report The Pensions Regulator (TPR) has published its monthly report on automatic enrolment, which sets

out information based on data submitted by employers. According to the report, 370,432 employers

completed their declaration of compliance between July 2012 and the end of December 2016. The

report also revealed that 6,536 employers confirmed that they have met their duties by completing

their re-declaration of compliance by December 2016.

TPR wins legal challenge relating to Silentnight DB pension scheme A group of claimants has been unsuccessful in gaining permission to bring judicial review proceedings

against the Pensions Regulator (TPR) with regards to an ongoing anti-avoidance case regarding the

Silentnight Group DB pension scheme. A judgment handed down by the Administrative Court on 10

January has ruled that judicial review is not an appropriate means of resolving the issues raised by the

claimants. In a Press Release, welcoming the judgment, TPR’s General Counsel and Director of Legal

Services Anthony Raymond said: “The judge agreed with our submission that these issues should not

be resolved by the Administrative Court. We will defend what we consider to be unfounded judicial

review applications and do all we can to ensure that these do not derail or delay the resolution of our

cases before the Determinations Panel.”

Survey finds 80% of workers not saving enough for retirement According to Press Release from the deVere Group their statistics show 80% of the working age

individuals who started seeking financial advice from the group in 2016 were not adequately saving

for their retirement.

Employers should provide help with retirement planning, say employees According to the annual Employee Insight Report published by Capita Employee Benefits, 60.3% of

employees felt that their employers should provide them with access to financial education to help

with their retirement planning. Of those surveyed, 39% of employees said they do not trust the

pensions industry.

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Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

House of Commons Library briefing papers These are documents published by the House of Commons or Parliamentary Library designed to give

an overview of Government policy to MPs and Peers. They normally contain a brief history of how we

got to where we are and some of the background comments made in the Chamber, in committee

stages as well as in written answers. They can be useful in gaining a wider understanding of certain

policies.

The following have recently been published:

Master Trust Regulation

This considers the provisions to regulate Master Trusts (a kind of pension scheme used by many employers for auto-enrolment) in the current Pension Schemes Bill.

Master Trusts are a form of trust-based multi-employer pension scheme. They are established by a founder who sets the rules and appoints a board of trustees. Employers can then use them to provide pensions for their workers rather than setting up their own, or using a Group Personal Pension (GPP) (which is a form of contract-based scheme).

The use of Master Trusts has grown as auto-enrolment has been rolled out. In January 2016, they had over 4 million members, up from 0.2 million members in 2010. (DWP, Impact Assessment, September 2016).

There is widespread agreement that the current regulatory framework for trust-based schemes is inadequate for Master Trusts. This is because:

It developed with single-employer schemes in mind and assumes an employer having an ongoing interest in the running of the scheme.

Many Master Trusts were set up to make a profit, which gives rise to the need for a different type of regulation to ensure member benefits are protected.

Master Trusts operate on a scale unprecedented in occupational pensions and the collapse of a large scheme has potential to create a greater shock than would be the case with a single employer scheme (Impact Assessment, para 15-19).

A Master Trust Assurance Framework has been developed by the Pensions Regulator (TPR) and the Institute of Chartered Accountants in England and Wales. However, it is voluntary and does not address risks such as those of financial stability and ensuring the provider holds sufficient capital in reserve.

In March 2016, the Work and Pensions Select Committee called for stronger regulation:

23. Gaps in pension law and regulation have allowed potentially unstable master trusts onto the market. Should one of these trusts collapse, there is a real danger that ordinary scheme members could lose retirement savings. There is also a risk that faith in auto-enrolment as a whole will be undermined. We support the Minister’s call for a Pensions Bill to introduce stronger regulation of master trusts. We recommend the Bill makes provision for the Pensions Regulator (TPR) to have power to enforce:

o minimum financial and governance standards for market entry; o ongoing requirements for Master Trust schemes, which might include making

compliance with the Master Trust assurance framework mandatory; and o measures to protect member assets in the event of a Master Trust winding up.

(HC 579, March 2016).

The Pension Schemes Bill [HL] 2016-17 aims to ensure those saving in a Master Trust are protected. It would provide that:

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Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

An authorisation and supervision regime for Master Trusts will be introduced, so that Master Trusts would have to demonstrate to the Pensions Regulator that they meet certain key criteria on establishment, and then continue to do so.

Existing Master Trusts will be brought into the regime and required to meet the new criteria.

Requirements will be placed on trustees to act in certain ways in the event of wind up or closure of a Master Trust to protect members in those circumstances.

The Pensions Regulator is provided with greater powers to take action where the key criteria are not met. (Bill 65- EN)

Much of the detail is left to regulations, on which the Government expects to conduct initial consultation in autumn 2017. It expects to implement the provisions in October 2018, although some will apply with effect from October 2016. (HL Deb 19 December 2016 c1489; HL Deb 1 November 2016 c561).

The Bill is currently in the House of Lords. Amendment to date include government amendments to make regulations under a number of clauses subject to the affirmative procedure in the first instance (DEP 2016-0916). An Opposition amendment requiring the Government to “make provision for a funder of last resort” (clause 9 of HL Bill 87). The Government opposed the amendment arguing that it would be a “costly and disproportionate response.” However, Baroness Drake argued that in the event of event of regulatory failure and a trust not having the means to finance wind-up, there was “nothing in the Bill to show how a member is protected” and “no answer to the question of who will bear the costs.” (HL Deb 19 December 2016 c1504-9 and section 4.3 below).

Issues of debate have included:

The importance of member engagement (see section 4.2 in the PDF);

The requirement for Master Trusts to have a separate scheme funder – following concerns expressed by the insurance industry that this could have costs and could result in unnecessary duplication of regulation (see section 4.3 in the PDF);

Whether conflicts of interest will be dealt with effectively (see section 4.6 in the PDF).

The impact of a ‘pause order’ on members’ rights to employer pension contributions or to payment of their pension (see section 4.8 in the PDF);

The extent of charges that can be applied (see sections sections 4.7 and 4.11 in the PDF).

The Bill is scheduled to have its Third Reading in the Lords on 16 January 2016, after which it will proceed to its Commons stages. Details are on the Parliament website.

MCQ 1

Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

MCQs: The following multiple choice questions relate to the above Pensions Related News document.

Question 1 According to research undertaken by LV=, of those individuals who have changed their retirement plans post Brexit the number that have postponed their retirement is:

A) 20%

B) 25%

C) 30%

D) 35%

Question 2 According to HMRC, some 4.2m couples are eligible to claim the Marriage Allowance, however, the number that are reported as claiming it are:

A) 1.3m

B) 1.4m

C) 1.5m

D) 1.6m

Question 3 According to a report in The Times, Aviva is piloting a scheme to establish an easy way for people to locate pensions that they have accumulated with previous employers. The pilot is currently being undertaken with:

A) Facebook

B) Google+

C) Instagram

D) Linked-in

Question 4 The latest figures from PwC's Skyval Index have revealed that the deficit of the UK's DB pension funds as at 31 December 2016 is:

A) £45bn higher than at the start of 2016

B) £45bn lower than at the start of 2016

C) £90bn higher than at the start of 2016

D) £90bn lower than at the start of 2016

MCQ 2

Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

Question 5 According to the figures recently released by the ONS, the average disposable income of retired households has:

A) fallen 13% to £21,770

B) has risen 13% to £21,770

C) fallen 13% to £20,770

D) has risen 13% to £20,770

MCQ 3

Paul Clark, ACIPP, FPFS, Chartered Financial Planner, paul@russelldene.co.uk, 07970 930219. RUSSELLDENE CONSULTING LTD. REGISTERED IN ENGLAND & WALES NO. 06617138.

REGISTERED OFFICE: 10 PARK PARADE, WHITLEY BAY, NE26 1DX.

Answers to the MCQs

Question 1 Key option C).

Question 2 Key option A).

Question 3 Key option D).

Question 4 Key option C).

Question 5 Key option B).