It was Mark Twain who was forced to protest that the reports of his death had been exaggerated. Although the terminal decline of the final salary pension scheme has been solemnly predicted for some time, for those of us involved in pensions this year it has felt more like a high fever than a long goodbye.
Just take a moment to think about all that’s happened in 2010: there’s been a swathe of new guidance from the Regulator on internal controls, on record-keeping (with targets for data accuracy), and on protecting members’ interests when incentive offers are on the table. Trustees have been urged to take the wide view on monitoring employer support, on considering asset-backed funding structures, and on understanding employer debt.
In terms of legal requirements, we’ve had to deal with changes to the rules on employer-related investment and a lurking issue on preserving surplus refund powers. The Government has added to the mix with changes to employer debt legislation to assist internal reorganisations, and the tightening-up – and subsequent removal – of a whole new regime to restrict tax relief on pension contributions by high earners. The announcement of the change from retail prices to consumer prices as the measurement index for revaluation of deferred pensions and increases to pensions in payment had something of a pantomime feel to it: “Will the Government legislate?” “Oh yes, it will!” “Oh no, it won’t!”.
Money purchase schemes haven’t been immune either, being hit by some of the issues listed above as well as the Regulator’s focus on improving standards of governance for defined contribution benefits.
So, what’s to come in 2011? We hope you’ve had time to relax in the run-up to the New Year, since it looks as though we’ll return to a frenzy of activity. We have a whole new tax regime to adjust to, with a reduced annual allowance and a host of compliance obligations around data tracking and paying tax charges (and if you haven’t nominated a specific pension input period end date yet, you might want to think about making that number one on your “to do” list for the New Year).
On top of that, you may be running a consultation exercise to change your revaluation and indexation rules for future service, you’ll need to look at whether changes to the rules on compulsory annuitisation and on employer-financed retirement benefits schemes affect you, and you need to do a final check to make sure that there are no group schemes which have been overlooked in the post-A-Day updating process – time runs out on 5 April 2011.
As usual, ‘tis the season to start thinking about the PPF levy – that’s a more complex task for 2011 than in previous years, as you need to think about whether your risk reduction activity now will benefit you when the shape of the levy changes in 2012. And after stop-start progress in 2010, preparations for auto-enrolment need to get well under way next year.
So – enjoy the break. Perhaps the best motto to end the year on is a wartime one, to lift embattled spirits: Keep Calm and Carry On. Best wishes to you all from the pensions team here at A&O, and we look forward to joining you in 2011.
Maria Stimpson is a partner at Allen & Overy LLP.
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