Chapter 4 (7 Questions) Flashcards
What is the main purpose of The Pensions Regulator?
To regulate work-based pension schemes and support employers in complying with their automatic enrolment duties.
Key responsibilities include ensuring employers enroll staff in pension schemes and pay into them, protecting savings, and improving workplace pension scheme operations.
List the key responsibilities of The Pensions Regulator.
- Ensure employers enroll staff in pension schemes
- Protect people’s savings in workplace pensions
- Improve the operation of workplace pension schemes
- Reduce the risk of pension schemes ending up in the Pension Protection Fund (PPF)
- Ensure employers balance the needs of defined benefit pension schemes with business growth.
These responsibilities are aimed at maintaining the integrity and security of pension schemes.
What powers does The Pensions Regulator have under the Pension Schemes Act 2017?
To authorise and de-authorise master trusts.
This act enhances TPR’s supervisory capacities in managing pension schemes.
What types of information does The Pensions Regulator gather?
- Scheme returns
- Whistleblowing reports
- Research and analysis work
- Thematic reviews
This information helps TPR identify and monitor risks in pension schemes.
True or False: The Pensions Regulator can issue improvement notices.
True.
TPR can take various actions to protect the security of members’ benefits.
What actions can The Pensions Regulator take against employers trying to avoid pension obligations?
- Issue contribution notices
- Issue financial support directions
These actions are taken to ensure the protection of scheme members’ benefits and the Pension Protection Fund.
Define ‘eligible complainants’ in the context of the Financial Ombudsman Service.
- Consumer
- Charity with annual income < £6.5 million
- Trustee of a trust with net asset value < £5 million
- Micro-enterprise with < 10 employees and turnover/balance sheet total < €2m
- Borrower under CBTL credit agreement
- Small business with annual turnover < £6.5m and < 50 employees
- Guarantor
These definitions determine who can raise complaints with the FOS.
What is the role of the Financial Ombudsman Service?
To deal with complaints from eligible complainants regarding financial services.
It provides a statutory dispute-resolution scheme.
What powers does the Financial Ombudsman Service have if it upholds a complaint?
- Money award
- Award for distress and inconvenience
- Interest award
- Costs award
- Directions
The FOS can impose these penalties to rectify complaints against financial firms.
Who can the Pensions Ombudsman investigate complaints from?
- Current or former members of a pension scheme
- Widow, widower, surviving civil partner, or dependant of a deceased member
- People with a pension credit related to a member
- Nominated individuals by a member or their estate
The Pensions Ombudsman investigates how pension schemes are run.
What is the purpose of the Pension Protection Fund (PPF)?
To protect members of defined benefit and hybrid schemes through an insurance scheme.
The PPF is funded by three types of levies.
Under what conditions may the PPF pay compensation?
- Employer with a defined benefit or hybrid pension scheme becomes insolvent
- Funds misappropriated through fraud
- Scheme is not a defined contribution scheme
- Qualifying insolvency event occurs
- Insufficient assets to secure benefits equal to PPF compensation
These conditions ensure that members are protected when their employer cannot fulfill pension obligations.
What are the compensation levels provided by the PPF?
- 100% for members at normal retirement age
- 100% for members in receipt of survivor’s benefits
- 90% for retired members not at normal retirement age
- 90% for deferred members not at normal retirement age
- 50% for spouse/civil partner benefits after insolvency
- 25% for one qualifying child, up to 50% if more than one
- 50% for children without a spouse’s pension, up to 100% if more than one
Compensation levels vary based on the member’s status at the time of insolvency.
What is the Financial Assistance Scheme (FAS)?
A scheme to help those who lost pension benefits due to company insolvency, not covered by the PPF.
It pays 90% of accrued pension benefits for underfunded defined benefit schemes that began wind-up between certain dates.
What are pension scams?
Practices luring individuals to move pension funds into unregistered schemes with promises of high returns or early access.
Cold calling regarding pensions is illegal under the Financial Guidance and Claims Act 2018.
What does the Pensions Act 2008 require from employers?
- Offer a qualifying workplace pension scheme
- Automatically enroll eligible jobholders
- Pay a minimum level of contributions
This act ensures all workers have access to workplace pensions.
What are the three types of worker categorization under the Pensions Act 2008?
- Eligible jobholder
- Non-eligible jobholder
- Entitled worker
Worker rights and employer duties depend on these categories.
What are the employer’s duties for an eligible jobholder?
- Automatically enroll them in a qualifying scheme
- Continue making minimum employer contributions
- Process opt-out notices
- Automatically re-enroll every three years
- Keep records of the automatic enrolment process
These duties ensure eligible jobholders receive their pension benefits.
What are the minimum contribution requirements for an automatically enrolled eligible jobholder?
- Employer minimum contribution: 3%
- Total minimum contribution: 8%
Employers must meet these contribution levels to comply with regulations.
Fill in the blank: Qualifying earnings for pension contributions include salary, wages, overtime, commission, and _______.
bonuses.
These earnings are used to calculate pension contributions.
What is the maximum overall benefits amount for a PPF trivial commutation lump sum?
£30,000.
This applies to members who have reached the minimum pension age and are under 75.
What is the minimum percentage of earnings that must be pensionable?
At least 3% of earnings.
What defines ‘pensionable pay’ in Sets 1 and 2?
Defined by the employer with Set 1’s minimum being basic pay.
Under what conditions must Set 1 be used?
When the average is less than 85%.
