Archive for the ‘Pensions’ Category
Employment Law Round Up
In our day to day work we have to read a huge amount of technical information to stay up to date with the latest developments. We like to share anything that we find useful with our clients, connections and followers.
The latest bulletin that we have received is from those very nice people at the law firm Herbert Smith LLP. It’s their Round Up of Employment Law Developments for June 2011. You can click through to the bulletin here.
There is a useful slant on the Default Retirement Age and some useful catch up on the Bribery Act that’s just come into force.
It’s well worth a read as a quick catch up for issues that you may need to know about.
If you need any help after you’ve read the bulletin please contact us here.
Lord Hutton’s 27 Recommendations
It’s been another very busy day on planet pensions! As we mentioned last week the Independent Public Services Pensions Commission under Lord Hutton has issued it’s final report.
Professional Pensions have done an excellent summary of the 27 recommendations made by the Committee. You can click through to the article here.
In short Hutton has recommended a move to a Career Average Revalued Earnings Scheme for future service across the public sector. He is strongly of the opinion that promises made under the current structure should be protected. That means older longer serving employees will still get the promises they have been given if the government protects the past service element.
So the main impact will be felt by younger employees or those with little past service. Interestingly he has also recommended that future public servants should not be given access to Defined Benefit scheme so we probably have to look forward to some form of Defined Contribution arrangement for new joiners.
Like all these things the devil is in the detail. We’ll be reviewing the contents over the next few days and no doubt there’ll be further articles on the subject.
One thing is for sure that something has to change if the public service pension promises are to remain affordable for future generations. It is a brave government that has decided to grasp this particular nettle rather than, like their predecessors, bounce the problem down the line.
These reforms must also dovetail with the changes to the Basic State Pension to ensure a uniformity of approach. It’s going to be a busy time over the next few years.
As is always the case…….watch this space!
Multi employer pension schemes – no storm in a tea cup!
In all of the latest gender related nonsense from Europe you’d have been forgiven for missing the latest tale of woe from the world of multi-employer pension schemes.
We’re grateful to Jennie Kreser of Silverman Sherliker for publishing an excellent article on the fate that has befallen the Wedgwood Museum – home of all that is great and good in the world of the eponymous pottery. Have a read of the article here – it’s well worth looking at. Jennie has a great style and brings complex issues to life in a clear and understandable way. You can subscribe to Jennie’s blog here.
We work with a number of employers in the Third Sector who are members of multi-employer pension schemes. Many of them will recognise this tale of woe. It is one that has befallen some charities who have found themselves having to close due to the imposition of huge (relative to their reserves) pension debts.
The Section 75 Debt regulations were primarily designed to avoid employers dumping pension liabilities by restructuring the business or group. The Law of Unintended Consequences means that not only are we seeing perfectly viable charitable organisations in danger of closing but also the possible loss of part of our national heritage.
The government are currently consulting on a change to these regulations but as far as we are aware no mention has been made of relaxing the regulations in situations like this. Clearly, something needs to be done.
Meanwhile, if you are in Staffordshire you may want to pop along to the museum before the shelves are bare!
Pension Snakes & Ladders – are you protected?
You may remember, back in the days when we thought that Pension Simplification would be just that, the government introduced a limit on the amount of money you could build up in registered pension schemes. This is known as the lifetime allowance. It started off at £1.5m in 2006 and has gradually grown to £1.8m in this tax year.
If you were affected by this limit, or thought you might be in the future, you could apply for protection. Not the type of protection you get from guys with sharp suits, wide lapels and violin cases but protection from the nasty tax charges that bite when you exceed the lifetime allowance.
In th
is new era of financial austerity high earners are bearing their share of the financial pain. The Finance Bill 2011 will introduce a new lifetime allowance of £1.5m from 2012. It’s the Treasury’s version of pension snakes and ladders.
So basically we are back where we started? No, not quite. The government have said that a new type of protection will be introduced. They’ve called it Fixed Protection. It will allow individuals to take advantage of the current £1.8 million lifetime allowance so long as they build up any further benefits. If you’ve claimed protection under the 2006 rules you can still have up to the £1.8m limit.
If you employ high earners with substantial pension benefits it’s worth looking at those whose pension values are between £1.5m and £1.8m
If you are an employee and you think that you may be affected you really should get some specialist advice.
Well there you have it. Pensions Simplification? As if!
A couple of bits of background reading
As ever nothing stays the same. Just a short post to include a couple of links to some good material that I have been sent by the very nice people at Herbert Smith LLP and DLA Piper LLP. We thought we’d include the links and a little bit of background to save you the time. We try to scour the web for this sort of thing so our clients don’t have to!
Herbert Smith – Round up of pensions developments
Click here a good overview of everything that’s going on in the world of pensions. If your organisation participates in a final salary multi-employer pension scheme there’s a good write up of a Scottish case. It involves an insolvent employer and a £20m debt. We won’t say any more it’ll only spoil the ending!
There’s also a good article on a TUPE case where some employees ended up getting taxed on a compensation payment for loss of benefits on a TUPE transfer. Buyer beware is the motto for TUPE transactions.
DLA Piper LLP – Be Aware
Click here for the February edition of the DLA Piper Employment Law publication Be Aware.
There’s some good stuff on the removal of the Default Retirement Age and what you can and can’t do. There’s also a good round up of what’s on the horizon legislation wise. Finally, the At a Glance section is a good overview of the various pay rates, maximum awards etc.