NEST restrictions to be lifted
Restrictions on the annual amount of contributions and on transfers to and from the National Employment Savings Trust (NEST) are to be lifted.
From 1 April 2017, members will be able to contribute (or have contributions paid on their behalf) of more than £4,600 per annum. The government has the option of permitting transfers from 1 October 2015 to coincide with the introduction of automatic pension transfers on changing jobs.
The restrictions were originally imposed to minimise any competitive advantage gained by NEST through its state aid. The European Commission has confirmed that it will not oppose the move.
Minister for Pensions, Steve Webb, said: “This is a common sense decision which will help people save and give certainty and confidence to employers choosing to use NEST. By convincing Europe to support us on this, we’ve achieved a victory for consumers.”
There are currently more than 1.5 million workers who save into workplace pensions through NEST, with that figure expected to rise to up to 4 million over the next 3 years.
New criteria for scheme administrators
From 1 September 2014, HM Revenue and Customs (HMRC) have new powers to refuse to register a new pension scheme or de-register an existing registered pension scheme where they believe that the scheme administrator (in the HMRC sense) is not a fit and proper person. The change is in response to concerns over pension liberation.
Schemes that are de-registered will be subject to a 40% tax charge on the aggregate value of the assets held within the scheme. Guidance on the new criteria may be found at www.hmrc.gov.uk/pensionschemes/fitproper-guidance.pdf.
VAT on investment services
Decisions made recently by the Court of Justice of the European Union (CJEU) have raised a number of questions relating to the VAT treatment of services provided to pension funds, in particular investment management services. The cases of PPG Holdings, a Dutch company (C-26/12) and ATP Pension Services, a Danish company (C-464/12) seem to conflict with the earlier UK case of Wheels Common Investment Fund Trustees and Others (C-424/11).
Wheels and PPG involved defined benefit schemes whereas ATP involved a defined contribution scheme. In ATP the CJEU held that some of the services supplied could qualify for exemption on the basis that the scheme in that case was a ‘special investment fund’. Clients are therefore advised to contact their investment managers who may in turn wish to make a protective claim as VAT can only be recovered retrospectively for a maximum of four years. HMRC will be issuing further guidance on this matter in the autumn.
The People’s Pension has become the first ‘master trust’ to receive independent assurance of compliance with the regulator’s ‘quality features’ for defined contribution (DC) schemes under the voluntary framework developed by the Institute of Chartered Accountants of England and Wales (ICAEW).
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