This article describes several new statutory instruments and updates practitioners on the latest versions of the key scheme registration, scheme return, protection and maintenance forms for registered pension schemes. Notes of the latest meeting of the Pensions Industry Working Group are also covered.

The Occupational and Personal Pension Schemes (Miscellaneous Amendments) Regulations 2007 (SI 2007/814) is a substantial set of largely technical miscellaneous amendments to some twenty SIs. These are to come into force on 6 April 2007.

One of the more significant changes is Reg 4(3), which affects fixed rate revaluation of GMPs for early leavers: where pensionable service terminates on or after 6.4.2007, the rate is 4%. (For leavers between 6.4.2002 and 5.4.2007, it is 4.5%.)

Last November we reported on a DWP consultation draft of these regs. A summary and analysis [PDF] of responses to the consultation is available: most commentators welcomed the package, and a few had no other comment than that.

The Registered Pension Schemes (Block Transfers) (Permitted Membership Period) (Amendment) Regulations 2007 (SI 2007/838) make a small amendment to SI 2006/498, which specifies as 12 months the maximum period during which an individual can have been a member of a registered pension scheme in order for a transfer into that scheme to be a block transfer*.

*A block transfer is a transfer from one scheme to another under which certain rights, transitionally protected from an earlier tax regime, are preserved in the transferee scheme. A block transfer must involve the transfer in a single transaction of all sums and assets representing the rights of a minimum of two members.

This limit on prior membership of the receiving scheme is relaxed in cases where the transfer is made into a personal pension scheme in which the all the transferring individual's rights are contracted-out rights. In that situation, any period prior to 6 April 2006 is ignored in calculating the prior membership period. That provision gives cover for transfers made between 6 April 2006 and 5 April 2007.

The new amending regs ensure that this cover also includes transfers made on or after 6 April 2007, which was the original intention, by providing that any period before the start of the 12-month period is ignored in these cases. In other words, if the receiving scheme is an APPS which the member joined before A-Day purely to accept contracted-out rights, the transfer can still be a block transfer no matter how long the member has already held protected rights under the scheme. The 12-month limit applies only to prior membership in respect of non-protected rights.

The regulations come into force on 6 April 2007.

The Income Tax (Indexation) Order 2007 (SI 2007/943), while not strictly about pensions, is nevertheless relevant. This annual Treasury Order sets the starting rate limit of charge to income tax at £2,230 and the the basic rate limit at £34,600, for tax year 2007/08.

The Registered Pension Schemes (Modification of the Rules of Existing Schemes) (Amendment) Regulations 2007, presently in draft [PDF] deal with the difficulty faced by those schemes whose rules contain a condition that no alteration to the rules may be made unless "approved" by HMRC. These regs will insert new provisions into the regulations dealing with modification of the rules of existing schemes (SI 2006/364), providing an over-ride to any provision in scheme rules that makes alteration of those rules subject to HMRC approval. These draft regulations apply to former approved schemes, including both occupational schemes and personal pension schemes. The current intention is that the regulations will be laid so as to come into effect from June 2007.

The Pensions Industry Working Group (PIWG) most recently met on 7 February 2007; this week HMRC published notes of the meeting. Minutes of earlier meetings are also available.

This meeting was attended by two representatives of the DWP, which intends to participate in future meetings as well. They outlined the current DWP deregulatory review and asked if the PIWG could let them know of any regulatory irritants (sound of floodgates opening?).

The administrative difficulties arising from the unauthorised payments and scheme sanction rules are a major issue. The meeting discussed several particular problems, including

• Trivial payments - where it is the only payment option;
• Unauthorised payments without a scheme sanction charge - ie those involving entitlements pre A-day, where the payment was made post A-day;
• Errors made by schemes where they are unable to correct, ie post death pensions of over £250 where they decide not to pursue recipient for overpayment; and
• For PPS administrators, their lack of control over contracting-out rebate payments from HMRC, which they often have to pay as an unauthorised payment.

HMRC promised to convene a meeting as soon as possible with the industry, including lawyers, to discuss the issue and to see what solutions can be identified.

HMRC summarised the various technical changes planned to the pensions tax regime, covering

• Transfers and transitional protection
• Ill health retirement
• Pension commencement lump sum rules
• Unsecured pension fund rules
• 2 year time limit on lump sum death benefits
• Winding up lump sums
• Non cash benefits
• Investment regulated pension schemes and UK real investment trusts (new guidance on REITS has just appeared)

A progress report was given on consultations on possible relaxations to the rules governing the LTA test at BCE3 and Dependants Scheme Pensions. Discussions had also been held on pension term assurance and on ASP, which one industry representative pointed out had not covered included the position of those who had died post A-day in ASP and the interaction with IHT.

In relation to Pension Schemes Online, PIWG members were asked to provide (within a fortnight) feedback on what would be needed from HMRC* before the date it becomes mandatory to file the following information online.

*For example:-
• what is the minimum notice period you would need?
• what kind of support would be needed from HMRC in the run up to that date?

• Register a new pension scheme
• Declarations by Scheme Administrators required under s.270 FA 2004
• Notification of cessation as Scheme Administrator
• Accounting for Tax (AFT) return
• Registered Pension Scheme Return
• Event Report

Forms update

1. New versions of some maintenance forms (APSS151, APSS152, APSS153, APSS154 and APSS160) have been published, for use from 21 March 2007.

2. Final versions of the Pension Scheme Returns (APSS 301 and APSS313) were published on 26 March.

3. A new design of the APSS200 form and completion notes for applying for protection against the Lifetime Allowance charge is also available.

4. From 2 April 2007 the APSS100 and APSS100A forms for registering a pension scheme will change. However because of an upgrade to Pensions Schemes Online to support new processes (see Newsletter 24), it won’t be possible to complete registrations using the new-style form between 06.00 4 April and 06:00 6 April. HMRC can only guarantee to process registrations on the existing paper forms if they are received by Tuesday 3 April.