Pensions changes in 2012

27 Jan 2012

Flexible apportionment arrangements

Amendments to the employer debt regime have been finalised by the DWP and will come into force in January 2012. The main development is the introduction of the “flexible apportionment arrangement” (“FAA”) for dealing with employer debts arising from corporate reorganisations. Under an FAA it is the departing employer’s liability share that is apportioned rather than an amount due under its Section 75 debt. The Government has also proposed to give trustees discretion to extend the period of grace from 12 months to 36 months.

Trustees, the leaving employer(s) and the replacement employer(s) must consent in writing to the FAA.

6 April 2012

Abolition of contracting out of the second state pension on a defined contributory basis

All schemes currently contracting out on such basis will no longer have an opportunity to do so after the abolition date. After the abolition date, scheme members will be contracted back into the state additional pension.

Trustees must inform affected members of the change.

6 April 2012

Reduction of Life Time Allowance

The lifetime allowance (LTA) will be reduced from £1.8 million to £1.5 million. Individuals who do not already have enhanced or primary protection may apply to keep an LTA of £1.8 million ("fixed protection") if they make no further pension savings after 5 April 2012.

Applications for fixed protection need to reach HMRC by 5 April 2012.

Enhanced and primary protections will both continue to apply.

12 Oct 2012

Employers must Identify the ‘staging date’ as defined in the Government staging timetable and their obligations concerning auto-enrolment.

21 Dec 2012

Gender differentiated actuarial factors

Test-Achats case means that EU States must make it unlawful for insurance companies to use sex-differential actuarial factors in the pricing of insurance products from 21 December 2012.

This will affect annuity purchases by members of DC pension schemes and has implications for the use of sex-based actuarial factors by DB schemes.

Dec 2012

Scheme record keeping standards deadline December 2012

Schemes need to have met the Pension Regulator’s targets for record keeping standards by the beginning of December 2012.

Employers, administrators and trustees need to consider if their schemes meet the Pension Regulators standards.