This report covers a number of new draft SIs and other regulatory developments during the past six days. We trust readers will forgive the resource limitations which oblige us to condense these into a single article.

(1) New Pensions Tax Simplification Regs

The following additional draft pensions tax simplification regulations and orders were published on 16 June 2005:

• The Pension Schemes (Enhanced Lifetime Allowance) Regulations 2005;
• The Registered Pension Schemes (Authorised Payments) Regulations 2005;
• The Taxes Management Act 1970 (Modifications to Schedule 3 for Pension Scheme Appeals) Order 2005; and
• The Transitional Provisions Order 2005

The Transitional Provisions Order 2005 has been temporarily published as a set of composite parts in individual orders covering the following measures:

• Equivalent pension benefits and state scheme premiums [technical note 1M];
• Pensions paid to dependant who has reached age 23 [technical note 4A]
• Commencement provisions for unsecured pension funds [technical note 4H]
• Non Residents and transitional protection [technical note 4I]
• Contributions to overseas schemes [technical note 4M]
• Calculation of Retirement Lump Sums where there are pre-A-Day retirement benefits being paid [technical note 4O]
• Funeral expenses [technical note 4P]

Technical note references above are to paragraphs of the IR Technical Note (TN) [PDF] published on 16 February 2005. We understand that all remaining TN modifications of the Finance Act 2004 which were not included in the 2005 Act will be dealt with in this manner, ie via regulations.

(2) The PPF (Tax) (2005-06) Regulations 2005

Also issued on 16 June, as a brief consultation (closing Monday 27 June), this draft SI extends a previous draft on which HMRC consulted in April this year. Additional regs deal with transfer of the Pensions Compensation Board monies to the Board of the PPF, and the tax treatment of compensation payments made from the Fraud Compensation Fund. These regulations have been incorporated into the earlier draft as Regulations 11 and 15.

(3) The Occupational Pension Schemes (Fraud Compensation Payments) Regulations 2005

From 1st September 2005, the new Fraud Compensation Fund, managed by the PPF Board, replaces the existing fund managed by the Pensions Compensation Board (PCB) as the body from which occupational pension schemes can seek compensation where their assets have been reduced by a fraudulent act or omission. Fraud compensation will continue to be available to money purchase schemes and the money purchase parts of hybrid schemes, as well as final salary schemes (this is wider than the PPF coverage for pension compensation).

The regulations in large part replicate the existing PCB regulations. Subjects covered include which type of scheme may not apply for fraud compensation, the kind of offence that can lead to a reduction in scheme assets, the details that an application for compensation must include and formulae for working out the eventual payments.

The DWP is conducting a limited consultation on this draft SI until Monday 11 July. Unfortunately it has not been placed on the web, but copies are available on request from regs@ariespensions.co.uk.

(4) Updated timetable for DWP Pensions Regs & Codes of Practice to 6 April 2006

On 17 June DWP provided a new update of their current plans for consultation and publication of some 77 more SIs in the run-up to 6/4/6, together with the latest schedule for 12 Codes of Practice from The Pensions Regulator. These documents are also available on request from regs@ariespensions.co.uk.

(5) Guide to the Pension Protection Fund (PPF) Levies

The PPF will be funded in part by compulsory levies on all schemes that are eligible, comprising for the first year (2005/6)

• an initial levy (to be applied for 12 months only from April 2005); and
• an administration levy;

• the pension protection levy; and
• an administration levy.

The initial levy and the pension protection levy will be used to fund the compensation payable to members of schemes where the PPF has assumed responsibility for the scheme. A new "Guide to the Pension Protection Fund Levies 2005/6" gives more information.

The pension protection levy includes a scheme-based element and a risk-based element. In the longer term, at least 80% of the pension protection levy will need to be raised through the risk-based element. However, during the early years this can be modified to enable the risk-based element to be implemented gradually.

The administration levy will be used to pay for the initial start up costs and ongoing administrative costs of the Pension Protection Fund. The initial start up costs will be collected over a three year period.

In addition a fraud compensation levy will be imposed on all occupational pension schemes that are eligible for the Fraud Compensation Fund to meet expenditure payable out of that Fund.

(6) Financial Assistance Scheme (FAS) Takes Shape

The Financial Assistance Scheme Regulations 2005 and The Financial Assistance Scheme (Internal Review) Regulations 2005 were published today in draft, for approval by resolution of each House of Parliament. The former, inevitably lengthy (32 pp), sets out the way the FAS will operate and is set to commence from 1 September 2005 (although we understand the Government has put back yet again, to April 2006, the date on which the first payments will actually dribble out to the lucky beneficiaries). The other set of regs make provision for the internal review of "reviewable determinations" made under the FAS, and will come into force on the day after they are made. This follows a consultation period which has resulted in some changes to the draft regulations published on 4th April 2005. The Government's formal response to the consultation is available on the DWP’s FAS sub-site together with links to the draft Regs and Explanatory Memoranda.

(7) Pensions Tax Simplification Newsletter No. 1 June 2005