Pensions Law And Regulation

Question 1

The PPF will provide compensation to members of DB schemes where the employer has become insolvent. What are the conditions and limits?

Answer 1

If already in receipt of benefits:
*100% of benefits accrued if they have reached the scheme’s retirement age
* Or if they are in receipt due to ill health
* Or in receipt of dependants pension

If not in receipt:
*90% of benefits accrued

Question 2

Protecting Pre-A-Day pension funds - two options

Answer 2

Primary and enhanced protection

Question 3

Primary protection - What is it? What is the main benefit?

Answer 3

• Those with accrued pension rights of £1.5m+ at April 2006
• Increases the individual’s LTA by a proportional amount representative of how much they exceeded this amount in 2006.

For example if their funds exceeded the new LTA by 25%, their ongoing new LTA would be 125% of the current value.

• As LTA now removed, main benefit is an increase in lump sum allowance - the amount the individual can take as tax free cash, as this is calculated as 25% of LTA

Question 4

Enhanced protection - What is it?

Answer 4

• Available for those who ceased active membership of a registered pension scheme by A-day. I.e. built up benefit but no longer accruing
• This form of protection was available to those with pre‑A‑Day benefits irrespective
  of whether the accumulated pension value at that date exceeded the then applicable
  lifetime allowance of £1.5m (2006/07).

Question 5

Tax-free lump sum - Primary protection

Answer 5

• Tax free lump sum allowance (LSA) calculated as 25% of the members LTA
• With Primary protection, the members LTA has been increased by the proportional amount they exceeded the LTA in 2006.

Question 6

QROPS

Answer 6

Qualifiying overseas pension scheme
- An arrangement to accept transfers overseas from a registered UK pension scheme that has not been used to provide an annuity
- Must be part of EEA or have an arrangement with the UK
- 25% charge if transferring overseas and not QROPS

Question 7

Stakeholder pension requirements

Answer 7

• Maximum minimum monthly contribution of £20
• Maxmimum annual charge of 1.5% for the first 10 years, 1% thereafter
• Must offer lifestyling option
• Must accept transfers in from other schemes

Question 8

When did it become unlawful to set a default retirement age for a pension scheme? (Unless objectively justified)

Answer 8

2010 - Equality act