pension

Question 1

the pensions regulator

Answer 1

• making sure that the employers set up occupational.
• protecting the pension
• improving the way workplace pension schemes are tun
• reducing the risk of them ending up in the pension protection
• making sure employers balance the risks between the pension and growing their business

Question 2

The Pensions regulator powers in three categories

Answer 2

• gather information
  -regulation and enforcement
• acting against avoidance
• they can issue issue contribution notices where staying debt has been avoided, financial support to be provided where the pensions regulator concluded that the sponsoring employer is insufficiently resourced.

Question 3

occupational schemes dispute

Answer 3

• the trustees need to have an internal respites mechanisms to the and stop issues when they arise
• the member can go to the ombudsman to complain if they don’t get their way internally

Question 4

financial ombudsman

Answer 4

• complain if there are delays ie annuities
• wrongly advised to transfer
• the pensions ombudsman is to companies in how schemes are run

Question 5

who can complain to the Financial Ombudsman

Answer 5

people who are eligible to complain

• consumer
• charity with income below £6 million
• trustee of a trust with assets less than £5.6 million
• micro enterprise with fewer than 10 employees with no more than 2 million euros
• borrower under a consumer buy-to-let credit agreement
• small businesses with an annual turnover less than £6.5 million and feeerr than 50 employees or a valance sheet if less than £5 million
• gatuntees
• it deals with complaints about such things as someone believing they were wrongly advised to transfer
• eight weeks to resolve complaints. only then if the complainant does not feel satisfied can it be referred to by the financial services ombudsman

Question 6

the pension ombudsman

Answer 6

• the pension ombudsmen is an independent organisation set up to investigate complaints about how pension schemes are run
• can investigate current or former members
• survivor or dependant
• people with a pension credit

Question 7

the PPF

Answer 7

• the PPF is an insurance scheme protecting members of defined benefit and hybrid schemes
• it’s independent of the pension regulator
• it is funded by three levied - administration , fraud compensation and pension
• when it takes over a scheme it will take over the assets

Question 8

entering the PPF

Answer 8

• will enter when funds have been misappropriated

Question 9

what has to happened for the PPF

Answer 9

• must be insufficient assets in the scheme to secure benefits in wind up that are the same it would be in the fund
• there must be no chance that the scheme can be rescued
• a qualifying insolvency event has occurred such as insolvency practitioners confirming this
• must not hence commenced wind up before 6 April 2005
• the scheme must not be a defined contribution scheme

Question 10

what happened after an insolvency event

Answer 10

• takes two years to determine if they will take it
• no new people afdmited
• no transfers unless it was agreed the day before the assessment period
• benefits must be paid to PPF level
• the PPF will review and moral hazards
• will look at any rules made with three years
• will ask the acturary to compete a valuation

Question 11

transferring

Answer 11

• the transfer must be agreed before they enter
• they must be satisfied they can pay it.
• transfer can not be valued higher than it would be if they were to get PPF benefits. They would need to have a lower amount
• Secrion 143 valuation is carried out to determine whether there are insufficient assets within the scheme. Valuation is based on the theoretical cost of buying out the schemes benefits with an insurance and the provision of the Ppf compensation entitlement to each member

Question 12

compensation levels

Answer 12

• the cap on compensation used to limit the amount

-people with 21 years service had a higher cap but this was disallowed

• this is now offered as a lump sum preferably to those who were retired after the insolvency and that they will pay compensation out
• the money will be paid from when they were called - no deadline. The compensation is limitless.

Question 13

PPF Amountdv

Answer 13

• people who had retired at the time of the bankruptcy - 100%
• people who had a spouses pension at the time of bankruptcy -100%
• people who had not reached retirement age at the time - 90%
• dependants who where not being paid yet get 25% each one where there’s a spouse add this to the spouse
• survivors benefits for children is 50% per child (without a spouse )
• members already in receipt on the grounds of i’ll health - up to 100%

Question 14

extra compensation

Answer 14

• only provides spouses pension if it’s the scheme rules.
• dependants must be under age of 18 and adopted or 23 and in education

Question 15

PPF revaluing

Answer 15

• post 2009 2.5%
• pre 2009 is double

for paid :
- post 1997 - 2.5%
-pre 1997 0

Question 16

FAS

Answer 16

• similar to the PPF
• in underfunded db schemes that started to begin winding up in 1997 to 2005
• it is from ones that tried to wind up will pay 90% for members capped at 41,000.00 a year and revalued at CPI up to 2.5% from 1997

Answer 17

• eligible job holders - must be enrolled
• non eligible - must be allowed to opt in
• entitled - have the right to ask
• postponement - a delay of up to 3 months i to see if they are eligible
• 16-21 non eligible holder
• 22 - state pension - eligible
• state pension - 74 - eligible
• People who are eligible are automatically enrolled when they have a salary in excess of £10,000.00
• if you earn £6,240 A- £10,000.00 you are a non eligible worker
• if you on below £6,240.00 you are a entitled worker

Question 18

contribution per category

Answer 18

• non eligible - most give information and process joining and contribute
• entitled worker - provide information about the right to join but they are not obliged to contribute

Question 19

contributions

Answer 19

• minimum is 8% with employer providing 3
• there are three sets of options
• set 1 - minimum contribution is 9% of pensionable pay. the employers contribution must be at least 4% of pensionable pay
• set 3 minimum contribution is 7% of earnings. Employer must contribute 3% of earnings
• set 2 minimum contribution is 8% pensionable pay. The employer must pay 3% and pensionable pay must be 85%. the ratio of pensionable pay is calculated as an average at scheme level

Question 20

opting out

Answer 20

-active membership is undone
- an eligible job holder and non eligible job holder have a right.
- workers who are entitled workers and who were contracted don’t have an opt out right
- before they can opt out they must be active .
- must have recieved enrolment information from an employer.
- if the job holder wishers to op to out after recievejng this information they must do so by giving an op out notice to the employer which is then due not to the pension scheme.
- the opt out must be revived within the forest period - this is one nonetheless after active entitlement or the worker received the employers letter. if it’s invalid they get a further Month and a half. the employer must then refund the contributions either one month after receding the valid opt out or by the last day of the second pay period.

Question 21

Comparing NEST and the Peoples pension

Answer 21

• NEST is a National savings and employment savings trust
• the peoples pension - ran by B&CR a not for profit organisation providing pensions for the construction industry for many years and now doing so for all eveyone
• both are sharia complaint, allow transfers in and no limit on contributions.
• For NEST the fees are 0.3% a year plus 1.8% on contributions made. no empire set up charge. the Peoples pension have a a rebate with fees of 0.5 %
• For NEST there is a retirement fund based on retirement date which changes. There are other options. For the Peoples Pension they use one of three risk based profiles or select from 8 funds. if no choice is made members automatically enrolled in the balanced one

Question 22

the peoples pension

Answer 22

• rebate on the management fee between 0.1% and 0.3% based on the value of their savings.
• there is no rebate on the first £3,000.00 of savings.

-between £3,000.00 - £6,000.00 is rebated 0.1%

• between £10,000.00 - £25,000.00 is rebated at 0.2%
• between £25,000.00 - £50,000.00 up to 0.25% rebate
• £50,000.00 0.3% is rebated
• minimum is 0.01 is calculated

Question 23

ofsett

Answer 23

• it’s not split

-takes into account the loss of tax free cash and spouse and death

Question 24

earmarking

Answer 24

• still opened by the member
• periodic or lump sum ones
• they can demand a lump sum as well
  -only get it when benefits drew
• taxted at the members rate
• souse had no say over onvestment
• ex spouse does then periodic payment will cease bu lump sum could remain and be payable
• if member remarried it continues
• if member dies payments stop but death in service could be payable
• If ex spouse re marries them payments could stop
• if the member pays more tax that’s what it’s taxed on. but if she had higher tax rate it would better
• the lifetime allowance is the memebrs lifetime allowance. it doesn’t change the amount but they have less tax free cash and same amount. The ex slide could be over the lifetime allowance and still get the members tax free cash

Question 25

pensin sharing

Answer 25

• can be shared
• S2P
• occupational schemes
• AVCS
• protected payments in addition to the state pension
• public
• all individual

what can’t be

• new state pension
• basic state pension
• state graduates retirement benefits
• a windows pension in payment
• pensions owned by the slide and taxed at tat rate
• funded scheme - they must be given a transfer amount. They do not have to be given membership
• unfounded scheme give transfer amounts but they are not legally required to.

Question 26

Age

Answer 26

• direct and indirect descriminatiok is not accepted due to EU Council Directive
• state pensions annuities and pension sharing orders are not covered
• applied to contibutuon
• direct and indirect can be justified on specific examples ie health and safety economic efficiency reducing staff turnover and increasing loyalty to staff .
• there are length of service ones as well

Question 27

paid parental

Answer 27

• under defined benefits they must be paid the same rate if it’s paid parental leave and they can allow contributions into an AVC
• for unpaid leave they do not count towards pensionable service but they must be classed as continued employment.
• for defined contribution schemes they must pay tbe contortions on the same basis if it’s paid
• under salary sacrifice for here there is a contract the employer will still need to pay even if the if they are not fully contributing - full pay / half pay it’s still the same

Question 28

bankrupt

Answer 28

• must have a debt of £5,000.00
• can force benefits in payment for 3 years
• can go back and claim that they deliberately put more money into their pension.
  -GMP can not be subject to income but can be taken into account when it looks at income - same as state pension