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Pensions Insights January 2023

02 February 2023

In our monthly e-alert, Pensions Insights, we give you our take on the latest highlights in the world of pensions law and policy.

If you have any queries about any of the issues covered, or you require advice on a pensions related matter, please do not hesitate to contact your usual contact.

Case Law 

Appeal against scheme sanction charge dismissed - Nilebond Limited v The Commissioners for His Majesty's Revenue and Customs - [2023] UKFTT 00014 (TC)

The First Tier Tribunal (FTT) has dismissed an appeal against a £15k scheme sanction charge levied on a scheme administrator for failure to comply with requirements in relation to employer loans.

The administrator in this case had made a loan to the sponsoring employer of the scheme in 2017 which was secured by a floating charge, however that floating charge was not registered with Companies House within 21 days of the loan being made.  Whilst the loan was repaid in 2018, in 2019 HMRC issued the scheme sanction charge on the basis that the loan was an unauthorised payment.

The employer then applied for and was granted an order extending the 21 day time period for registering the charge and duly registered the charge later in 2019.  The employer then appealed against the scheme sanction charge on the basis the extension of the time period for registration "cured the defect retrospectively".

The First Issue in the case was whether the Loan was an “unauthorised employer payment” or whether it was an “authorised employer loan” as defined by the Finance Act 2004.  This turned on whether the Charge had to have been registered at Companies House under the Companies Act 2006 (“CA 2006”) in order for the payment to be an “authorised” employer loan. 

On this it was held that where a loan was made to a corporate employer, it was only an “authorised employer loan” if the related charge had been registered in accordance with the requirements of CA 2006.

The Second Issue in the case was whether the Loan was nevertheless an authorised employer loan because the Charge had been registered after the Loan had been repaid, or whether the Charge had to have been registered within 21 days of the Loan being made. 

On this is was held that retrospective registration did not satisfy the requirements and as a result the Loan was an unauthorised employer payment.

CMG Pension Trustees Limited v CGI IT UK Limited - permission to appeal sought

It is understood that permission to appeal has been applied for in relation to the High Court decision of CMG Pension Trustees Limited v CGI IT UK Limited.

In the case which we reported on in our August Pensions Insights 2022 the High Court determined that payments made to members to remedy underpayments of benefits were subject to a six-year limitation period under the Scheme's forfeiture rule. 

New Law  

Guaranteed Minimum Pensions Increase Order 2023

Coming into force on 6 April 2023 the Guaranteed Minimum Pensions Increase Order 2023 specifies 3 per cent. as the percentage by which that part of GMP attributable to earnings factors for the tax years 1988-89 to 1996-97 and payable by contracted-out, defined benefit occupational pension schemes is to be increased.

Pensions Dashboards (Prohibition of Indemnification) Bill

The Pensions Dashboards (Prohibition of Indemnification) Bill has completed its first reading in the House of Lords.  This private members' bill makes provision prohibiting the trustees and managers of pension schemes from being indemnified in respect of penalties imposed under pensions dashboards regulations. 


PPF Levy Rules for 2023/24

The levy rules for 2023/24 have now been published along with confirmation from the PPF that levy payers and industry experts welcomed proposals for changes which will cut the levy to around £200 million for 2023/24, down from £620m in 2020/21 and £390m for this current year.

The PPF note that:

  • 98% of schemes expected to pay less levy in 2023/24 than this year 
  • The majority of schemes that pay a risk-based levy can expect it to fall by more than half
  • Proposals to significantly reduce volatility in levies and to incorporate new asset class information will go ahead as planned. 

TPR Statement on supporting DC savers

TPR has issued a statement for trustees of DC schemes and their advisers which sets out the main points on how schemes should communicate and support savers in the current economic climate.  

TPR's expectations of trustees are set out in relation to reviews of governance and investment arrangements, supporting savers and communications and in particular it is noted that trustees will be expected to:

  • Review governance structure, investment advisers remit and characteristics of scheme's saver profiles;
  • Gather and analyse changes in savers behaviour;
  • Review investment arrangements and implementation, monitor fund performance and review the risk of investments which may not protect savers from high inflation;
  • Review communications to savers and the level of support being given to them;
  • Help savers understand  what a fall in their DC pension would mean for them given their personal circumstances;
  • Encourage savers to communicate or update their retirement plans including when and how they wish to access benefits, to seek guidance or take advice and not to make hasty decisions;
  • Communicate with savers before and after, as well as through the annual benefit statement.

A checklist is included in the Statement which is intended to assist trustees in developing an action plan.

If you need any further advice please contact a member of our expert pensions team.

Further Reading