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R04 - Pensions > 4 - Pension Regulation > Flashcards

4 - Pension Regulation Flashcards

1
Q

What is the roles of Pension regulator

A

Automatic enrolment
Protect savings in pension
Improve the way that workplace pension schemes are ran
Reduce the risk of pension schemes ending in PPF
Make sure employers balance needs of DB scheme with growing business

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2
Q

What is TPR principal aim

A

To prevent problems from developing, it is risk based and proportionate

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3
Q

How many code of practice does TPR have

A

16

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4
Q

What are the three broad categories TPR have?

A
  1. Gathering information
  2. Regulation and enforcement action
  3. Acting against avoidance
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5
Q

What type of information does TPR gather?

Does it share its information with others?

A

Scheme returns
Funding documents
Employer declaration that comply with workplace pension duty

Yes
HMRC, FCA, PPF, DWP

3

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6
Q

What are the range of options that TPR can use to ensure that rules are followed “what can they do to prtoection security of members benefits”

5

A

Issue improvement notice
Recover unpaid contribution from employer
Prohibit individuals if does not consider fit for pension scheme trustee
issue fines

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7
Q

How can the TPR act out against avoidance? What do they issue?

A

Contribution notice:
Where there is delibarate attempt to avoid a statutory debt - notice directs those to pay up debt in full.
TPR can start procedure up to six years after an act/failure took place

Financial support direction:
TPR concludes that sponsoring employer is either a service company or is insufficiently resourced at a time chosen by TPR. TPR can start the procedure to seek financial support up to two years after relvant time

2

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8
Q

What is a clearance procedure

A

Available to employers who wish to confirm that a certain transaction will not be subject to TPR anti-avoidance powers

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9
Q

What ACT gave the TPR powers to (de)authorise master trusts

A

Pension scheme act 2017

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10
Q

What is an eligible complainant in FOS

7

A

Consumer
Charity <6.5m annual income
Trustee of trust - NAV <5mill
Micro-enterprise <10 employees < 2mil euros
Borrower under CBTL (Consumer buy to let)
Small business <50 employees < 6.5mil <5m balance sheet
guarantor

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11
Q

What are some examples the FOS would deal with complaints

3

A

Wrongly advised to transfer pension
Advised to take unsuitable pension
Excessive delay in setting up annuity - financial loss

3

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12
Q

What can’t the FOS deal with?

Who are they dealt with then?

2

A

Occupational scheme linked to individual employment
Personal pension set up by employer (complaint about employer/admin of scheme

They are dealt with pension ombudsman

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13
Q

How long do firms have to resolve complaint before FOS are involved

A

8 weeks

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14
Q

When should the complaint to FOS be handed in

A

Within

Six months from firm given consumer final response (firm has to mention six month time limit and
Six years from event the consumer is complaining about (olr if later, three years from when consumer knew)

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15
Q

What can the FOS give when upholding complaint

A

Money award
Award for distress and inconvenience
Interest award
Cost award
Directions

5

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16
Q

What is the limit of award after 1 April 2023

A

£415k

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17
Q

How are interest awrad paid out from FOS

3

A

Part of Money award
On top of financial award
After financial award has been calculated

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18
Q

When should indviduals go to Pension ombudsman service?

A

If a pension scheme
* Take too long to do something without good reason
* Failing to do something it should’ve
* Not following its own rules/law
* breaking a promise
* giving incorrect/misleading info
* Not making a decision in right way

6

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19
Q

What can’t the POS investigate?

A

State pension
Tracing lost pension
sales/marketing of pension
decision made by tribunal, court or other ombudsman

4

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20
Q

What is the limit of Pension ombudsman complaint?

A

Limitless

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21
Q

Who do the pension ombudsman service only investigate complains from

A

current/former members of pension scheme
widow/ civil partner/ dependent of member who dead
pension credit
someone nominated to take complaint to POS

4

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22
Q

What is Moneyhelper

A

Free service by money and pension service sponsored by DWP

  • Guidance to make effective financial decisions
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23
Q

What is PPF

A

Insurance scheme designed to protect members of defined benefit and hybrid schemes

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24
Q

Who is PPF ran by

A

PPF board, independent of pension regulator

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25
How is PPF funded? ## Footnote 3
Three levies Admin levy Fraud compensation Pension protection levy: * Scheme based * Risky based
26
Where might a PPF may pay compensation ## Footnote 2
An employer with UK based DB/ Hybrid occupational pension scheme becomes insolvent and scheme is underfunded Funds of a DB or hybrid scheme been misappropriated through fraud
27
What are some conditions for PPF to take responsibility for scheme? ## Footnote 3
Must not be DC scheme Must not commenced wind up before 06/04/2005 No chance it can be rescued
28
What happens if a prescribed insolvency event occurs. How long does PPF take to complete this within?
PPF completes within 2 years. The assessment period: Trustees remain in control. No new members No further benefits No transfer values paid Benefit can be paid on level of PPF compensation PPF will review any moral hsazards PPF will review any hazards **within 3 years prior** - rule changes which may lead to increase PPF compensation ## Footnote 6
29
What are some cases that trustees pay out transfer values when in an assessment period (insolvency)
Requested and accepted transfer value **before assessment date** Has designated scheme willing to accept transfer value Trustees can pay out if they are satisfied that they can still meet objective of ensuring protected liabilities do not exceed assets
30
What valuation is carried out to determine whether there are insufficient assets within a scheme
Section 143 valuation
31
PPF compensation: Survivor benefit for spouse/partner benefit
50%
32
PPF compensation: Qualifying children (spouse paid/spouse not paid)
Spouse paid 25% (1), increasing to max of 50% (more than 1) Spouse not paid 50% (1) increasing to max of 100% (more than 1)
33
What is definition of qualifying child
Under 18 18-23 (in qualifying education/qualifying disability)
34
When can a PPF trivial commutation lump sum be paid out
Member reaches Normal min pension age Under 75 Has max 30k benefits
35
What is the window of payment for trivial commutation lump sum
12
36
Who are the FAS
Financial assistance scheme assists those who had lost pension benefits through company insolvency not covered by PPF
37
How much do FAS pay of pension
90% - cap is £41,888 a year between 01/04/2023 - 31/03/2024
38
What is the FCA website helping individuals to not get scammed
Scamsmart
39
What is postponement? - when speaking about workers
A delay up to 1 day to three months in employer assessing a member of staff to determine what duties must be undertaken ein lreation to auto-enrolment
40
What are the thresholds for annual earnings for automatic enrolment?
16-21 Non eligible jobholders: £6240+ <£6240 Entitled worker 22-SPA Eligible job holder: 10k+ 6240-10k: non eligible jobholder <6240 entitled worker SP Age: 74 Non-eligible job holder, has a right to opt in over 10k
41
What is the date the assessment carried out after postponement called
Deferral date
42
How long is the joining period for automatic enrolment
6 weeks from eligible jobholder automatic enrolment date
43
What are the steps for automatic enrolment
Provide information on the eligbile jobholder to the pension scheme Give enrolment information to eligible jobholder Make arrangements to achieve active membership
44
Who is responsible to join a pension scheme (automatic enrolment)
Employer
45
What are the two options available to an employer for min contributions
Employer min: 3% Total min: 8% Base contirbutions on qualifying earnings Use an alternative defintiion (such as basic pay) and pay cont on pound zero
46
How many different sets of minimum contributions are there?
3 Set 1: min cont (employer +ee) - 9% of pensionable pay Employer cont must be at least 4% of pensionable pay Set 2: min cont (er+ee) - 8% of pensionable pay ee cont must be at least 3% of pensionable pay defintion of pensionable pay must include at least 85% earnings set 3: min cont (ee+er) - 7% earnings Employer cont must be at least 3% earnings All earnings must be pensionable
47
What is automatic enrolment
Every 3 years automatically enrol all job holders who opten out of scheme
48
What is The Peoples pension?
Run by B&CE - provides pension for construction industry
49
What are the charges of peoples pension
0.5% and annual charge of £2.50
50
What are the charges for NEST?
0.3% + 1.8% on contributions made
51
How much is the rebate of The Peoples pension mgm charge
0.1% - 0.3% 3k-10k - 0.1% 10k-25k - 0.2% 25k-50k - 0.25% 50k + - 0.3%
52
What are the three ways to claim pension rights as a result of a divorce
Offsetting Earmarking Pension sharing
53
What is offsetting in regards to divorce pension rights
Pension benefits are valued as immediate assets (lump sum value in todays term) - then can offset against other assets of marriage. DB scheme: CETV (Cash equivalent transfer value) Following are taken into account - Ex spouse iwll no longer gain benefit from pension/tax free - Ex spouse will no longer receive spouse pension - Loss of death in service benefit DC Scheme: - Percentage/proportionate division of fund value taken into account - Loss of pension benefit -Loss of spouse pension Loss of death in service lump sum
54
What is earmarking in relation to divorce
Ex spouse is entitled to some of pension benefits when taken. Either as Earmarked periodic payment order: Payment to ex spouse will start when member takes own benefit Earmarked lump-sum order Payment made when member comes to draw retirement benefit
55
Is Earmarking orders set out in percentage terms?
Yes
56
Adv/Disadv of earmarking
Adv: If ex-spouse remarries - no need to give them periodic payment (maybe lump sum) Member controls investment No money changes hand straight away Disadv: Not payable until member secures benefits Member can defer benefits No control over pension (ex-spouse)
57
What is pension sharing?
Divides scheme member pension rights at divorce
58
What pension rights cannot be shared ## Footnote 4
New state pension Basic state pension State graduated retirement benefits widow(er) pension in payment
59
What pension rights can be shared?
Protected payments SERPS and S2- Occupational schemes Registered individ schemes (personal pension, stakeholder, retirement contracts) Statuory schemes
60
What happens if ex-spouse dies in pension share?
It forms a part of their estate
61
What must be recommended to ex spouse in DB schemes (split)
Transfer value
62
How are unfunded schemes operate in relation to a split pension as a result of divorce
Opposite of DB scheme Transfer value no Membership Yes

R04 - Pensions (10 decks)

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