Pensions Industry Update - February 2016
HMRC Newsletter 76
HMRC has produced Newsletter 76 on 18 February 2016. This newsletter includes information on relief at source, pension flexibility and the Lifetime Allowance reduction with focus on the information that members will need to apply for transitional protection. It also speaks about the process to follow for members taking their benefits soon after 6 April 2016 if their benefits are in excess of the LTA and they do not have their temporary reference number so far.
Contracting-out Countdown bulletin number 13 and 14
HMRC has published number 13 in its series of Countdown bulletins on 2 February 2016. This latest instalment covers pension forum feedback (which includes changes to HMRC processing after 6 April 2016), active member closure scan survey results and updates from HMRC and the DWP. In the same month, they also produced number 14 which highlights the Scheme Reconciliation Service, confirms there will be a GMP calculation service (self-service basis) after 6 April 2016 and answers some popular questions submitted to the new State Pension mailbox (to name but a few highlights).
High Court decision in Hughes v Royal London
The High Court has now given its much anticipated judgment in the case of Hughes v Royal London. Ms Hughes had appealed against an earlier determination of the Pension Ombudsman who had ruled that she did not have a statutory right to transfer her benefits to her chosen arrangement because she was not “an earner” for the purposes of the transfer legislation as she was not in receipt of earnings from an employer connected to that arrangement. Although the legislation does not specifically state that earnings for these purposes have to come from such an employer, the Pensions Ombudsman took the view that it would be very strange if they did not.
Upholding Ms Hughes’ appeal, Mr Justice Morgan held that, in the circumstances, it was not open to the Pensions Ombudsman to read additional words into the legislation and, as such, a general meaning had to be given to the word “earner”. Consequently, as Ms Hughes was in receipt of earnings from other sources, she was “an earner” and had a statutory right to transfer. The Pensions Ombudsman has announced that he will not be making an appeal against the High Court’s decision.
This decision has come as a major blow, not only to those schemes and administrators who had restructured their anti-scamming processes to take account of the earlier Pensions Ombudsman’s determination, but also to the wider fight against pension scamming.
The Regulatory Change Working Group is currently putting together a new anti-scamming process which will, amongst other things, take account of the High Court’s ruling.