With the Pension Schemes Bill going before a committee of the House of Commons this week, the MPs have invited public input. With this in mind I canvassed my colleagues in the Burges Salmon pensions team. The results are in and the top three areas of focus our team would like to see are (imagine drumroll…):
- Facilitating GMP equalisation and conversion
- Providing a safe harbour or narrowing the scope of TPR‘s enhanced new powers in order not restrict provision of advice
- Reforming employer debt law (section 75)
There are moves to introduce additional provisions in relation to prevention of scam activity. By its nature this is always going to be a question of cat and mouse with criminals and, to corrupt the famous spider-man line, with any new powers for trustees and providers will come additional responsibility (and therefore potential liability).
The DWP has indicated since its April 2019 guidance that it is no longer considering amending the GMP equalisation conversion legislation for clarification, and HMRC has acknowledged that the tax issues on GMP conversion are complex. Surely with a pension schemes bill before Parliament, opportunity is being missed for simplification and clarification.
Much has been written about TPR‘s new powers, their breadth, and the accompanying risks to the viability of, and additional costs for, otherwise ordinary transactions. TPR is expected to publish guidance, but this will not be a safe harbour (and in any event could not be without a legislative framework making it so). Under the current proposals there is a real risk of additional delay, adviser and negotiation cost, paperwork and even failed transactions where the proposals would otherwise be perfectly viable and within the rules and spirit. Time will tell whether all this additional burden on legitimate activity does in fact restrict illegitimate activity, which of course is the driving force behind these changes.
As pension lawyers we spend a good deal of time advising on the subtleties of the employer debt legislation. There remain a number of areas where clarification or simplification would be welcome, particularly for frozen schemes and former employers.
We will be watching the Bill’s progress carefully.