Administration Service Level Agreements

A member of the community has requested that we put a poll on Pensionweb titled Administration Service Level Agreements.

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AE increase of contributions from 6 April 2019

Hi, I'm interested in the approach Employers are taking towards minimum contribution increases from 6 April 2019. Specifically where an employer wants to retain a contribution rate that is lower than the default from 6 April 2019 so that people who don't want to increase contributions can opt-out and re-join on the existing lower rate.

My opinion is that the AE contribution levels are absurdly too low to provide realistic retirement planning. I wish that every employer would find it essential to operate a scheme with a contribution level well above the minimum. I am not at all surprised that members who think about it tend to increase their contributions above the minimum, when the AE default is obviously not going to be adequate for most people.

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Existence Checking

Who do you use for your existence/tracing services for your Scheme?

Response 1
FTB - they have been good.

Response 2
We use a combination of FTB and LexisNexis.

GMP Equalisation and Company Accounts

We are currently debating how to allow for GMP equalisation in our year end accounting disclosures (as at 31/12/18). We account under UK GAAP. Apparently, some companies are proposing not to allow for GMP equalisation this year as there is too much uncertainty around GMP equalisation for them to accurately assess the potential impact. Has anyone come across this argument? Are you planning to make an allowance for GMP equalisation?

Response 1
We are waiting for a final opinion from our auditor (big 4) but we are expecting to have to include a provision of a very approximate estimate in the statements under UK GAAP. The argument for not allowing at all for GMP equalisation on the basis that we cannot yet calculate it accurately sounds week to me, and I imagine will not be accepted by auditors generally.

Response 2
We expect our auditors to require an estimated figure.

Response 3
We included a provision in our valuation (31 March) of 1% of liabilities and, as far as I am aware, the company is intending to use the same "methodology" and the auditor is happy with that if your financial year end is post Lloyds I think an estimate will have to be provided.

Fiduciary Management

Our Chairman has asked me to find someone "impartial" with knowledge and expertise to help guide the Trustees through discussions about whether or not to switch to Fiduciary management ordinarily we would look to our investment and actuarial consultants for this type of thing however they provide Fiduciary management services so is reluctant to use them. For the same reason he does not want someone from a firm who helps in the selection of a fiduciary manager. Please can anyone provide a recommendation for someone who might be suitable or have any ideas?

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Overseas Transfer to Non QROPS

A deferred member of our Plan living in Australia wants to transfer his benefits into his self-managed pension arrangement in Australia which is not on the HMRC QROPS list. The HMRC guidance talks about a scheme sanction charge of between 15% and 40%. But it is not very clear to me how this would work. Can such a transfer be made?

It can, but it would be an authorised payment subject to the related 40% plus 25% charges. The overseas transfer charge would not apply because it only applies to ‘recognised’ overseas transfers to a QROPS.

The member does not have a statutory right to transfer to an overseas scheme that is not a QROPS, so not allowing it may be an option. I don't see why the scheme should make a payment that will incur a tax penalty against the scheme. Also, as Sue says, the scheme rules may have a restrictions on allowable payments/receiving schemes and the making of unauthorised payments.

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