Legal News

Pensions Ombudsman determination: Mrs E ( CAS-38639- F6P7)—29 April 2024 What was the background to the Pensions Ombudsman’s decision? Mrs E was employed by Avis Budget Group (the employer) from 18 August 1986 until her redundancy on 21 December 1992. During this period, the applicant belonged to the final salary section of the Avis UK Pension Plan (the Plan), which was governed by the Avis UK Pension Plan Trust Deed and Rules (the Rules). Avis Pension Trustee Limited served as trustee of the Plan (the trustee). On 18 May 1990, the CJEU handed down its judgment in Barber v Guardian Royal Exchange [1990] 2 All ER 660. It determined that, because pension benefits fell within the scope of Article 119 of the Treaty of Rome (renamed the Treaty on the Functioning of the European Union), occupational pension schemes had to equalise the NRD for male and...

Quilter plc has reported that freedom of information figures obtained from the government’s Money and Pensions Service ( Ma PS) show ongoing problems for pension savers, even after parliament brought in retirement savings transfer rules two and a half years ago. Under the Occupational and Personal Pension Schemes Regulations, trustees must pause or stop a pension transfer if they suspect a customer is being targeted by scammers, in line with the government’s amber and red flag system. Amber warnings can involve: transfers linked to an overseas investment opportunity signals that the policyholder is facing unusually high charges Quilter argues that glitches in the process have led to many transfers being blocked when it was not necessary......

In this issue: Pensions and the General Election Trustees duties Daily and weekly news alerts Dates for your diary Trackers Pensions and the General Election Conservative, Labour and Liberal Democrat manifestos—key pensions announcements The Conservative and Liberal Democrat parties have now issued their manifestos for the General Election scheduled for 4 July 2024. The Conservative manifesto commits to retaining the state pension triple lock, so the state pension will rise each year by whichever is highest of earnings growth, price increases, or 2.5%. Other Conservative pension measures include: from April 2025, an age‑related tax‑free personal allowance that will also track the triple lock, thereby guaranteeing the new state pension always sits below the tax‑free threshold......

An open letter dated 10 June 2024 cautioned politicians of all parties that 14 million savers are set to reach retirement without adequate funds for a reasonable pension income overall. As the nation prepares to vote in the general election on 4 July 2024, Labour is projected to secure a parliamentary majority for the first time in 19 years. The letter was endorsed by 11 organisations, among them the think tank Demos, insurer Phoenix Group, and the Investing and Saving Alliance, a trade association by nature as such......

Just Group reported that a poll of more than 1,000 adults found nearly three in ten employees had taken money out from their pensions between turning 55 and ceasing full‑time employment altogether. Of those who tapped their pension savings ahead of leaving full‑time job roles, almost half did so without seeking any advice or guidance, the research findings indicate. Stephen Lowe, group communications director at Just Group, described the findings as particularly worrying. ' It is troubling that a sizeable share of retirees are accessing their pension before exiting full‑time work without the support of financial advice or guidance,' Lowe said. He added that retirees have been contending with a difficult economic backdrop overall......

The IFS, in a report released on 7 June 2024, said the incoming pensions minister will need to take a series of weighty decisions on pensions policy after the forthcoming general election, covering matters such as the state pension age and whether British workers are putting aside enough for later life. Heidi Karjalainen, a senior research economist at the IFS and one of the report’s authors, said the minister will have ‘a substantial in-tray’ once the vote is over. Many of these issues arise because, in today’s pension landscape, individuals shoulder considerable risk and responsibility, Karjalainen noted. While that brings people greater flexibility, she cautioned that individual misfortune or poor choices — or, for some, simply failing to choose at all — can lead to serious negative outcomes, in a way that was far less common in the past......

The consultancy stated on 6 June 2024 that mid-sized pension schemes have fewer endgame routes than either larger or smaller peers. Hymans Robertson noted that retirement savings arrangements with assets exceeding £250m enjoy broad flexibility, from continuing to operate to releasing surplus to secure partial or full insurance. By contrast, the recently floated public sector consolidator may suit schemes with less than £10m in assets, the firm added. The consolidator’s aim is to bring together a series of smaller, solvent pension schemes within a single fund. However, the 2,600-plus defined benefit plans that sit between these thresholds encounter particular obstacles, the consultancy said, especially where trustees are seeking to transfer their liabilities to an insurer......

LCP reported that its yearly poll of scheme trustees also indicated that a significant cohort of pensions specialists firmly believes managing systemic climate threats should be part of a trustee’s responsibilities. The firm did not reveal how many people were surveyed, or when fieldwork took place, but said the complete annual survey will be released publicly in full in June 2024. Aaron Punwani, LCP chief executive, welcomed the fact that several schemes have adopted net-zero targets. However, Punwani urged an updated interpretation of trustees’ fiduciary duty, so they can consider climate risk over the long term......

The insurer reported a growing array of routes for providers under £150m ( US$192m) in size to secure a pension risk transfer. According to Joe Hathaway, associate partner for risk settlement at Aon, the market for pension scheme risk settlement remains buoyant; despite chatter that smaller schemes are being squeezed out by the wave of mega deals, that is not what their experience shows in practice. Hathaway also noted that there are now 'more options and resources' on hand for smaller pension plans than before, he said......

On 31 May 2024, TPT Retirement Solutions reported that 75% of the more than 2,000 people surveyed by Censuswide in May 2024 want political parties to prioritise workplace pension reform ahead of the forthcoming general election. The study also found that almost nine in ten want the winner of the 4 July 2024 contest to do more to help people save for retirement, while roughly six in ten worry they are not saving enough. According to David Lane, TPT’s chief executive, the findings underline working people’s desire for pension reform. He added that most are not saving enough for retirement and many find retirement decisions difficult......

The IFS has advised the opposition party to act very swiftly to help minimise disruption if it wins the 4 July 2024 general election and replaces the Conservatives. Recent polls place Labour an average of 21 points ahead of the Conservatives, implying Keir Starmer’s party is set for a landslide victory. In April 2024, the government removed part of the pension tax system known as the LTA. This provided an incentive for National Health Service doctors who had taken early retirement to return to the workforce. Workers who had saved more than £1m into their pensions......

Original news Mr E ( CAS-55100- G3W9)-19 April 2024 Summary In brief, Mr E’s complaint stemmed from the Court of Appeal’s ruling in Burgess v BIC [2019] EWCA Civ 806. The court concluded that the governing documents of the Bic UK Pension Scheme (the Scheme) contained no provision for increases to pension benefits earned from service before 6 April 1997. For years, pensions had been paid on the basis that members were due such uplifts, which meant sizeable overpayments had arisen. The trustees moved to claw back those overpayments by invoking their right of recoupment, a step Mr E opposed. This, in turn, paved the way for the PO to consider the principles that apply when exercising the right of recoupment. What is the background to the determination?......

WTW noted that, in 2023, actuaries across the industry assumed an average 65-year-old would live five months fewer than in 2022. The firm said this marked the sharpest annual fall in life expectancy on record. Mortality modelling plays a significant role in how retirement savings plans are funded, because members’ expected lifespans directly set the scale of a scheme’s liabilities. WTW also reported FTSE-350 employers held a combined defined benefit pension surplus of 109% in 2023. An unprecedented shift, they also said this year......

In this issue: General election 2024 Daily and weekly news alerts Dates for your diary Trackers General election 2024 IFS comments on reintroducing lifetime allowance The Institute for Fiscal Studies ( IFS) has released a piece assessing whether Labour’s pledge to bring back the pensions lifetime allowance ( LTA) is prudent. It finds a rationale for restoration—particularly as it views the pensions tax system as overly generous to higher earners—while urging Labour, if it becomes the next government, to move swiftly and go further than a straightforward reinstatement of the LTA. Beyond restoring the LTA at its former threshold (£1,073,100), the IFS presents several alternatives. These include reviving the LTA at a higher figure alongside a lifetime cap on contributions into a DC scheme, or cutting the amount of pension from which 25% can be taken tax free. It also suggests...

International Distributions Services Plc, the present owner of Royal Mail, stated on 29 May 2024 that EP Corp Group AS, which has lodged a takeover proposal, intends to press ahead with establishing the UK’s first collective defined contribution ( CDC) pension arrangement. CDC plans are risk-sharing vehicles, unfamiliar in Britain but commonplace in Canada and the Netherlands. Under these pensions, assets are combined within a broader collective fund instead of being allocated to form a personal savings pot for individual savers overall......

Lewes Crown Court has ordered Lee Bartholomew, former company director of 1066 Target Sports Ltd., to pay a £7,500 penalty to TPR, plus £7,500 in legal costs ordered by the court. According to TPR, he appeared before the court in the southern county of East Sussex on 31 May 2024, TPR said. The regulator brought a prosecution in 2023, alleging that he had failed to provide necessary information during its investigation into his shooting range. He had denied the allegation in June 2023, before later pleading guilty to doing so. In his ruling in the case, Judge Stephen Mooney said Bartholomew chose to withhold documentation he ought to have provided, knowing that disclosing it would alert the regulator that he was not paying money where he should have done......

The retirement savings firm reported a poll of over 1,000 adults in which nearly one in three said they had to use savings just simply to cover the years until state pension age or due to redundancy or reduced pay. Just Group also noted that more than half of respondents had left work earlier than they had anticipated. Stephen Lowe, group communications director at Just Group, said a third of over-55s withdrew pension funds before stopping work. ‘ Some did so by choice and others out of necessity,’ Lowe said. It seems that drawing on pensions ahead of leaving full-time employment is assisting significant numbers of people to cope with......

What are the practical implications of this case? In Larry Trachtenberg v the Commissioners for His Majesty’s Revenue and Customers [2024] UKFTT 376 ( TC), the ruling carries clear, practical consequences for advisers. Appreciating the decision’s effect will support practitioners when advising on HMRC’s use of TMA 1970, s 29 to raise ‘discovery’ assessments aimed at recovering tax said to be due because of unauthorised pension scheme payments. The Tribunal confirmed that the functioning of FA 2004, s 255 does not prevent HMRC from relying on its TMA 1970 powers in circumstances comparable to those encountered in Mr Trachtenberg’s case. In addition, the Tribunal explained its approach to deciding whether a taxpayer has acted ‘deliberately’, so that the extended time limits in TMA 1970, s 36(1A) may apply, taking guidance from the Supreme Court authority of HMRC v Tooth [2021] UKSC 17 at para...

In this issue: Key developments and materials Legislation: some statutory instruments approved prior to prorogation of Parliament Types of pension schemes Daily and weekly news alerts Dates for your diary Trackers Key developments and materials Snap 4 July election leaves pension reform in disarray The UK government’s move on 22 May 2024 to call a snap general election for 4 July has, according to experts, placed the pensions landscape in limbo, casting doubt on whether the next government will pursue the ambitious reform programme. Around a dozen regulatory initiatives are paused as the civil service enters pre-election purdah. While the two main parties appear to agree on many pensions policy themes, notable differences remain, and industry voices are growing louder for clear manifesto commitments. ‘ One of the big questions surrounds the fate of the recently reformed pensions tax system, as well as...

Adam Tolley KC of Fountain Court Chambers, acting for the Home Secretary, contended that two police officers injured on duty who later became disabled should be prevented from using the Employment Tribunal to pursue disability discrimination claims. He told the court that such matters ought not to be heard by an employment tribunal but resolved in another forum instead, elsewhere. In other circumstances the officers might reasonably have qualified for a payment under regulation 12 of the Police Injury Benefit Regulations, yet that provision applies solely to officers who depart the force within 12 months of the injury. In the two cases, brought by N Clark of Derbyshire Constabulary and Michaela Bell of West Midlands Police, each maintains that their impairments emerged gradually over time and that they fell foul of the time bar. Tolley further argued they should not be...