Chapter 4 - Pensions Regulation Flashcards
Why was The Pensions Regulator (TPR) set up?
It was set up in 2004 via the pensions act to support the DWP
3 key responsibilities of TPR…
Make sure employers auto enrol employees
Protect savings
Reduce the risk of pension funds ending up in the Pension Protection Fund (PPF)
What are TPR’s three categories of action?
Gathering information
Regulation/enforcement action (issue improvement notice/fines)
Acting against avoidance (issuing a contribution notice to employers)
Can TPR authorise master trusts?
Yes, the pensions act 2017 gave TPR powers to authorise and de authorise master trusts
Who does the FOS only accept complaints from?
A consumer
A charity with income less than £6.5m
Trustee of a trust with assets less than £5m
Micro enterprise with less than 50 employees and turnover less than £6.5m
When must the FOS resolve a complaint by?
6 months from the business sending the consumer a final response
Or
6 years from the event
In 2021 the Money and Pensions Service (MaPS) launched a consumer facing service called…
Money Helper
What 3 levies is the PPF funded by?
Administration levy
Fraud compensation levy
Pension protection levy
How do the PPF’s benefits increase each year?
Increase each year in line with CPI, up to a max of 2.5% increase
What are the 3 conditions for a trivial commutation lump sum to be paid?
Max of £30,000 in benefits
Member is at least 55
Member is under 75
Are the Financial Assistance Schemes payments inflation linked?
Yes linked to CPI with a max of 5%
What is the Financial Assistance Scheme (FAS)?
Designed to assist those who have lost pension benefits through company insolvency but who aren’t covered by the PPF
What are eligible, non eligible and entitled jobholders?
Eligible: must be auto enrolled
Non eligible: have the right to opt into the scheme
Entitled: employees who have the right to ask to join the scheme
Before a job holder can choose to opt out they must (2):
Have become an active member of the pension scheme
And
Have received the enrolment information from their employer
What is automatic re-enrolment?
Every 3 years employers must automatically re-enroll all jobholders who had previously opted out
How do the charges compare from NEST via The Peoples Pension?
NEST: 0.3% pa + 1.8% on conts
PP: Management charge of 0.5% + annual fee of £2.50
What are offsetting, earmarking and pension sharing with regards to divorce
Offsetting: Value of the pension is offset against the other assets
Earmarking: Ex-spouse can have benefits earmarked in the members pension scheme for future payment
Pension sharing: Divides the pension rights at the time of divorce
Which 4 pension types cannot be shared in a pension sharing order?
State pension
Basic state pension
State graduated retirement benefits
Widow pension already in payment
Within what maximum period, if any, should a newly-appointed trustee of a defined benefit occupational pension scheme reach the required level of trustee knowledge and understanding?
6 months
If someone intends to transfer his existing capped drawdown arrangement to a capped drawdown arrangement with another provider. How, if at all, will his pension year, reference period and basis amount be affected by the transfer?
The existing pension year, reference period and basis amount will be unaffected by the transfer
Where the Pensions Regulator believes that an employer is deliberately attempting to avoid paying a statutory debt, it may issue a:
A contribution notice
Before a complaint can be sent to the FOS, it must be raised with the business the complainant feels is at fault. The business has how long to offer a solution?
8 weeks
What are the 3 sets of minimum contribution levels?
Set 1: Min total cont 9% of pensionable pay, employer must cont 4%
Set 2: Min total cont 8% of pensionable pay, employer must cont 3%
Set 3: Min total cont is 7% of earnings, employer must cont 3%
As part of a divorce settlement, an earmarking order was put in place for Gwen against Chris’s pension benefits. What impact will this have on his lifetime allowance when he crystallises his benefits?
There will be no impact on his LTA, but all benefits will be tested against his own LTA, despite Gwen having access to some of the fund
Who would deal with complaints regarding someone’s occupational pension schemes?
The Pension Ombudsman
What was the main purpose of the Pensions Act 2017?
To give TPR the power to authorise and deauthorise master trusts
If someone is receiving income via an earmarked pension post divorce, how will it be taxed?
On the members highest rate of marginal tax
If TPR conclude a DB scheme is under resourced they can issue a…
Financial support direction
Does a re-marriage impact any offset agreement after a divorce?
No, as the offset is agreed at the start of the divorce (aka clean break arrangement)
