Pension News 04/05

April 15th, 2005 by JCB
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PENSION NEWS

 

THE SECRETARIAT

ACTUARIAL AND INVESTMENT

CONSULTANCY REVIEW

At the end of 2004 the Trustees decided to carry out a review of the Fund’s actuarial and investment consultancy provider (as far as I can ascertain this is the first one in 33 years). Invitations to Tender were sent out to the main four providers, including the incumbent Watson Wyatt, and interviews were carried out. Two firms impressed the Trustees, but at the end of the day it was Aon Consulting that the Trustees selected.  So we now have a new actuary coming to grips with the idiosyncrasies of the PNPF while carrying out a triennial valuation.

VALUATION AS AT 31 DEC 2004

The Fund is currently undergoing a triennial valuation as at 31 December 2004. By mid February the valuation data had been submitted to the actuary and the draft accounts followed on a month later. It is hoped to have the preliminary results available to the Trustees by late April with an aim to finalise details in May. The Trustees will then review the present strategic investment policy of the fund in light of the changed investment climate, the Fund’s financial position and its liability profile at the end of 2004

CHANGES IN PENSIONS REGULATION

As from 6 April 2005 there have been a few changes in pensions regulations. This date sees the establishment of a New Kind of Regulator and the Pension Protection Fund.

The Pensions Regulator (TPR)

The Pensions Regulator will take the place of the Occupational Pensions Regulatory Authority (OPRA) set up under the 1995 Pensions Act. With the new title comes new powers. The new Regulator will build on the success of Opra, but will be more proactive and will focus its activities on the key risks to members’ benefits. These activities include:

·        Protect the benefits of members of work-based pension schemes;

·        Promote the good administration of work-based pensions; and

·        Reduce the risk of situations arising which may lead to claims for compensation from the Pensions Protection Fund. Guidance on compliance with pensions legislation and various codes of practice setting out standards of conduct and practice will be provided by the TPR. In April two codes will take effect; on whistle blowing and notifiable events. These codes can be found on the TPR’s website http://www.thepensionsregulator.gov.uk

The Pensions Protection Fund (PPF)

This Fund applies to final salary schemes only and aims to help members of schemes when an employer becomes insolvent and the scheme does not have sufficient fund to pay the expected level of benefits. Initially the PPF will be funded by a levy on the scheme of:

• £15 for active members, pensioners and widows;

• £5 for deferred members

It is expected that the levy will double next

year

The benefits to be protected will be:

·        Pensioners will receive 100% of entitlement capped at £27,778; and

·        Actives and deferreds 90% of entitlement capped at £25,000

BUDGET MARCH 2005

On 16^th March 2005 the Chancellor delivered his last budget before the General Election. Some of the measures were directly aimed at winning over the grey vote. £1.8 billion of the spending measures include:

·        £200 Council tax refund to pensioners in 2005/06.

·        doubling of the starting threshold of stamp duty land tax to £120,000.

·        free off-peak bus travel for over 65s from April 2005.

·        increase in Child Tax Credit in line with earnings until 2007-08.

·        inheritance tax allowance to be raised by £36,000 over 3 years to £300,000.

·        increased spending on education.

TAX ALLOWANCES

Single Person

Aged under 65 £4,895

Aged 65-74 £7,090

Aged 75+ £7,220

Aged income limit £19,500

Married Couple’s Allowance

Aged under 75 £5,905

Aged 75 and over £5,975

Age income limit £19,500

Blind Person Allowance

£1,610

Income Tax Bands

Starting rate 10% 0 – £2,090

Basic rate 22% £2,090 – £32,400

Higher rate 40% Over £32,400

Pensions Earning Cap

The pensions earning cap for all post April 1989 joiners of occupational pension schemes has been raised to £105,600 for the 2005/06 tax year. This cap will be superseded by legislation due to come into effect on 6 April 2006.

Civil Partnership Acts

This Act takes effect from December 2005 and from this date couples who enter into a civil partnership will be taxed in the same way as married couples.

Debbie Marten

debbie@pnpf.co.uk