Chapter 4 - Pensions Regulation

Question 1

Why was The Pensions Regulator (TPR) set up?

Answer 1

It was set up in 2004 via the pensions act to support the DWP

Question 2

3 key responsibilities of TPR…

Answer 2

Make sure employers auto enrol employees
Protect savings
Reduce the risk of pension funds ending up in the Pension Protection Fund (PPF)

Question 3

What are TPR’s three categories of action?

Answer 3

Gathering information
Regulation/enforcement action (issue improvement notice/fines)
Acting against avoidance (issuing a contribution notice to employers)

Question 4

Can TPR authorise master trusts?

Answer 4

Yes, the pensions act 2017 gave TPR powers to authorise and de authorise master trusts

Question 5

Who does the FOS only accept complaints from?

Answer 5

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

Question 6

When must the FOS resolve a complaint by?

Answer 6

6 months from the business sending the consumer a final response
Or
6 years from the event

Question 7

In 2021 the Money and Pensions Service (MaPS) launched a consumer facing service called…

Answer 7

Money Helper

Question 8

What 3 levies is the PPF funded by?

Answer 8

Administration levy
Fraud compensation levy
Pension protection levy

Question 9

How do the PPF’s benefits increase each year?

Answer 9

Increase each year in line with CPI, up to a max of 2.5% increase

Question 10

What are the 3 conditions for a trivial commutation lump sum to be paid?

Answer 10

Max of £30,000 in benefits
Member is at least 55
Member is under 75

Question 11

Are the Financial Assistance Schemes payments inflation linked?

Answer 11

Yes linked to CPI with a max of 5%

Question 12

What is the Financial Assistance Scheme (FAS)?

Answer 12

Designed to assist those who have lost pension benefits through company insolvency but who aren’t covered by the PPF

Question 13

What are eligible, non eligible and entitled jobholders?

Answer 13

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

Question 14

Before a job holder can choose to opt out they must (2):

Answer 14

Have become an active member of the pension scheme
And
Have received the enrolment information from their employer

Question 15

What is automatic re-enrolment?

Answer 15

Every 3 years employers must automatically re-enroll all jobholders who had previously opted out

Question 16

How do the charges compare from NEST via The Peoples Pension?

Answer 16

NEST: 0.3% pa + 1.8% on conts
PP: Management charge of 0.5% + annual fee of £2.50

Question 17

What are offsetting, earmarking and pension sharing with regards to divorce

Answer 17

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

Question 18

Which 4 pension types cannot be shared in a pension sharing order?

Answer 18

State pension
Basic state pension
State graduated retirement benefits
Widow pension already in payment

Question 19

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?

Answer 19

6 months

Question 20

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?

Answer 20

The existing pension year, reference period and basis amount will be unaffected by the transfer

Question 21

Where the Pensions Regulator believes that an employer is deliberately attempting to avoid paying a statutory debt, it may issue a:

Answer 21

A contribution notice

Question 22

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?

Answer 22

8 weeks

Question 23

What are the 3 sets of minimum contribution levels?

Answer 23

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%

Question 24

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?

Answer 24

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

Question 25

Who would deal with complaints regarding someone’s occupational pension schemes?

Answer 25

The Pension Ombudsman

Question 26

What was the main purpose of the Pensions Act 2017?

Answer 26

To give TPR the power to authorise and deauthorise master trusts

Question 27

If someone is receiving income via an earmarked pension post divorce, how will it be taxed?

Answer 27

On the members highest rate of marginal tax

Question 28

If TPR conclude a DB scheme is under resourced they can issue a…

Answer 28

Financial support direction

Question 29

Does a re-marriage impact any offset agreement after a divorce?

Answer 29

No, as the offset is agreed at the start of the divorce (aka clean break arrangement)