PENSIONS NEWS JULY 2009

September 10th, 2009 by JCB
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As I write this, summer is halfway over and holidays have been taken.  I went home to see my nephew tie the knot and Loretta enjoyed the wilds of west coast Scotland.

The Secretariat

Things have been relatively quiet in the Secretariat over the last quarter, well as quiet as possible under the circumstances, so there is not much to report.

Annual Report & Accounts 2008

I must apologise to members about the delay in getting the 2008 Trustee Annual Report and Accounts out to you, but a change in the audit team meant a new approach was adopted and PKF refused to sign off the accounts until the last t was crossed and i dotted.  You will have them by the end of summer – I promise.

Ill-Health Rule

The trustees have agreed to expand the ill-health rule to allow them the discretion to reduce an ill-health pension (currently they can only suspend ill-health pensions).

I am hopeful that this will be the last change for the rest of the year and that I will be able to send the Rules off to be reprinted in the not too distant future.

Budget 2009

This year’s budget on 22 April 2009 introduced a range of measures, some of which take effect from 2010-11 and others from 2011-12.  Fiscal tightening was expected, but major changes to the pension’s tax regime for higher earners were never anticipated.

The vast majority of pension scheme members will not be affected by the new provisions, the government believes only 1.5% of pension savers will be.  However, for members earning more than £150,000 pa its impact could be both immediate and in the longer term serious.

The Budget announced that from 6 April 2011 tax relief on pension contributions would be restricted for members with an income of at least £150,000.  When the new regime is in operation, members affected will be entitled to retain no more than basic-rate tax relief (20%) on pension savings.  Some tapering is expected with the restriction in basic rate tax relief applying in full to individuals with income of £180,000, or over.

Transitional anti-avoidance provisions, effective 22 April 2009 to prevent “front-loading” of benefit accrual to obtain the full tax relief at 40% in advance of the 2011/12 changes were also announced.

These restrictions apply not only to money purchase arrangements, but to final salary arrangements as well.

It is a move designed to boost Treasury revenues, but has triggered fears that it could be a precursor to further reductions in pensions tax relief.

Although the changes will only affect a small number of people they are most likely to be senior managers who influence the employer’s pension policy.

default Retirement Age

The government’s review of the default retirement age, which allows employers to force workers to retire at age 65, has been brought forward from 2011 to next year, in response to “changing demographic and economic circumstances”.  There has been mixed response to this action as the Confederation of British Industry (CBI) believes that a default retirement age assists staff in determining when it is right to retire and allows firms to plan ahead with more confidence.  Whereas the TUC welcomed the early review but said that employers should not force workers into working longer by inadequate pension provision.

Trivial Commutation

Finally, under much delayed regulations pension pots up to the value of £2000 can now be taken as a lump sum at retirement, regardless of the member’s other pension provision.  Previously members who had overall pension pots amounting to £17,500 were forced to find an accumulative annuity.  These provisions will not apply to personal or stakeholder pensions.

Debbie Marten

debbie@pnpf.co.uk

Retirements

February 2009 to April 2009

G. Turner Tees

March

Pensioner Deaths

February 2009 to April 2009

J. P. Baines Manchester

W. V. Fry Manchester

J. H. Law Manchester

C. A. Rhodes Medway

K. N. Taylor Liverpool

PNPF COURT CASE

PNPF court case

This topic was the subject of a special debate at the Interim Delegates Conference in May. Chairman of the Trustees, Richard Williamson (Boston), referred delegates to the report contained within the conference pack (available to members on request) but explained that due to the litigation process he had been unable to include specific details. The Court hearing has been set for 18^th January 2010 and a “deliberation” will be made within three months of the hearing. Richard explained that the hearing and subsequent deliberation would not conclude the issues but would represent the beginning of what was sure to be a long process in determining liabilities for the fund deficit. Because of the complexities of the hearing, a sub committee had been set up to trawl through the vast amount of documentation going back as far as the 1970’s when the new Pilotage Act was first mentioned. In a highly unusual, but welcome development, all available documentation has been placed  on the solicitors’ (Lovells) website to which all members have access upon application.

Due to these court proceedings it had not been possible to complete the Triennial Valuation and consequently the PNPF had met with the regulator to explain the situation. The outcome of the meeting was that the regulator was satisfied that the legal action was necessary and in the interests of both members and pensioners.

Following the presentation Joe Wilson announced that Richard was now standing down from Chairman of the PNPF Trustees to become Vice Chairman and paid tribute to the phenomenal amount of time and effort that Richard had put in on behalf of fund members and pensioners during his time as Chairman, especially bearing in mind that the Trustees were about the only part of the court proceedings not receiving any remuneration!

JCB