Singapore court’s cryptocurrency decision
Implications for cryptocurrency trading, smart contracts and AI
Essential Pensions News covers the latest pensions developments each month.
On August 20, 2017, the DWP and HM Treasury published a consultation response confirming the new measures which are intended to protect private pension savers from the threat of unscrupulous pension scammers.
The measures will include:
The cold calling ban will be enforced by the Information Commissioner’s Office.
The Government also intends to tackle scammers by ensuring that only active companies, which produce regular, up-to-date accounts, can register pension schemes. Limiting members’ statutory rights out of occupational schemes will mean trustees must check that the receiving scheme is:
The new transfer regime is due to be progressed during 2017 but will not be finalised until the master trust authorisation regime is in place.
The announcement came as new figures were released showing almost £5 million was obtained by pension scammers in the first five months of 2017. It is estimated that £43 million has also been unlawfully obtained by scammers since April 2014, with those targeted having lost an average of nearly £15,000, as scammers try to encourage savers to part with their money with false promises of low-risk, high-return investment opportunities.
Some of the necessary legislation is to be included in the Finance Bill 2018, a draft of which was published on September 13, 2017 (see further below).
View the consultation response.
The consultation response confirms that, broadly, the proposals were positively received. However, while the proposed measures go some way to tightening the restrictions on possible pension scams and protecting consumers, the cold calling ban may be difficult to enforce. While the ban on cold calling has been welcomed, there is a lack of a definite timetable, with the Government stressing the need for more work “on the final and complex details” of the ban during the course of 2017.
The greater clarity surrounding statutory transfer rights to be provided to scheme trustees, will be welcome as this issue has proved problematic in recent years following the growth of more innovative pension liberation schemes. However, linking the introduction of these measures to the roll-out of the master trust authorisation regime may mean that the measures will not be in place until 2019, and that has been noted as a concern by many respondents.
In our update for July 2017, we reported that the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the New Regulations) came into force on June 26, 2017, the deadline for transposition into UK law of the EU Fourth Money Laundering Directive.
The Money Laundering Regulations 2007 (the 2007 Regulations) require trust or company service providers to register with HMRC if they are not authorised by the FCA (or certain other specified professional bodies) and where they are in the business of offering services as a trustee or director of a trustee company.
The New Regulations define trust or company service providers in the same way as the 2007 Regulations, and thus registration will continue to apply to those acting as trustees by way of a business. However, the classification of occupational pension schemes as low risk trusts under HMRC’s existing guidance, meant professional trustees of those schemes were not required to register with HMRC, and this had caused some confusion.
HMRC’s latest Trusts and Estates Newsletter, which was published on September 14, 2017, contains further information about the new trusts registration service (TRS) under which trustees of certain private trusts (including pension trusts) must register online and provide HMRC with information about the beneficial owners, where this is required by the New Regulations.
Under the New Regulations, HMRC is required to maintain a register of beneficial owners and potential beneficiaries of “taxable relevant trusts”. A taxable relevant trust is a “relevant trust” (broadly speaking, a UK express trust where all the trustees are resident in the UK) that is liable in a given tax year for either income tax, capital gains tax (CGT), inheritance tax, stamp duty land tax (SDLT), land and buildings transaction tax (LBTT) or stamp duty reserve tax (SDRT). While registered pension schemes are generally exempt from income tax, CGT and inheritance tax, they are likely to incur one or more of SDLT, LBTT or SDRT on their investment dealings unless their investments are held wholly within a unit-linked life policy.
By January 31, 2018 (or January 31, in any later year after they were first liable for any of the above taxes), the trustees of a taxable relevant trust must give HMRC a range of information about the trust and its beneficiaries.
HMRC originally required a taxable relevant trust that had incurred a liability in 2016/17 for income tax or CGT (and was not previously registered for self-assessment) to register with the TRS by October 5, 2017 in line with normal self-assessment rules. However, the newsletter confirms this deadline has been extended to December 5, 2017 in the TRS's initial year of operation, by which date the trustees must also provide the required beneficial ownership information. For a taxable relevant trust that has incurred a liability in 2016/17 for any of SDLT, LBTT or SDRT, the registration and provision-of-information deadline remains January 31, 2018.
Separately, the newsletter confirms HMRC has published two new forms to help trustees and pension scheme administrators meet their information obligations regarding taxable lump-sum death benefits paid to trusts.
View the Newsletter.
This is of interest to DB schemes offering “bridging pensions”. Some schemes offer bridging pensions where the normal retirement age under the scheme rules is lower than the member’s State Pension Age (SPA) and additional benefits are paid during the period before the member receives his State Pension.
The DWP is consulting on draft regulations to enable the Pension Protection Fund (PPF) to alter its compensation to reflect the different rates payable to members receiving or entitled to a bridging pension under their scheme rules. Currently, the PPF’s compensation rules mean that any member in receipt of a bridging pension continues to receive it past SPA.
As a result, members entitled to a higher rate bridging pension when a scheme enters the PPF have their PPF compensation fixed at that rate for life, whereas if the scheme had not entered assessment the member's pension would have decreased when the bridging pension ceased to apply under the original scheme rules.
The draft regulations reflect the DWP's preferred “smoothing approach” to allow PPF compensation to be reduced to reflect more closely the compensation that members would have received in their employer’s pension scheme. This would require actuarial calculation of a flat-rate lifetime-equivalent compensation amount. An alternative, but more complex “mirroring” option is also presented, with sequential different rates of compensation to mirror a member's scheme provision. The DWP calls for evidence about the current bridging pension arrangements in pension schemes to assess the potential impact of these changes.
The consultation closes on October 1, 2017.
View the consultation.
Of interest to formerly contracted-out DB schemes is the publication on August 30, 2017 of HMRC’s latest edition of its Countdown Bulletin.
The Bulletin provides further detail for administrators of such schemes about the end of contracting-out and is available here.
Of interest to all scheme administrators is the publication on August 31, 2017 of HMRC’s latest Pension Schemes Newsletter. The principal topics covered are:
View the Newsletter.
The first version of the Finance (No.2) Bill 2017 was published on September 8, 2017, along with explanatory notes. The Bill includes the two pensions-related provisions that were withdrawn from the Finance Bill 2017 when it was fast-tracked through the legislative process ahead of the June 2017 general election.
The following provisions are included in the Bill and will apply retrospectively from April 6, 2017:
The Bill had its first reading on September 6, 2017, and its second reading September 12, 2017.
In the Spring 2017 Budget, the Government announced proposed measures to tackle pension scams and a consultation response was published on August 20, 2017 (see above). On September 13, 2017, draft provisions to be included in the Finance Bill 2018 were published setting out proposed amendments to the tax registration regime, which are intended to improve HMRC’s effectiveness at combatting fraudulent pension schemes and restricting tax registration to those schemes providing legitimate pension benefits.
Specifically, draft Schedule 1 of the new Bill amends Part 4 of the Finance Act 2004 to extend the circumstances in which HMRC will be allowed to refuse to register, or will be able to deregister a pension scheme to include:
The amendments concerning dormant companies are intended to come into effect on April 6, 2018. The amendments in relation to unauthorised master trusts will come into force on the same day that section 3 of the Pension Schemes Act 2017 (prohibition on operating a master trust scheme unless authorised) comes into force, or if later, the date the Bill receives Royal Assent.
The technical consultation on the draft legislation closes on October 25, 2017. The final contents of the Finance Bill 2018 will be confirmed at the Autumn 2017 Budget to be presented on November 22, 2017.
The Employers’ Duties (Implementation) (Amendment) Regulations 2017 (the Regulations) make changes to the date the employer duties under the Pensions Act 2008 to automatically enrol a worker into a pension scheme first apply. They come into force on October 1, 2017.
The Regulations make further technical changes to the auto-enrolment regime in order to ensure the DWP's policy regarding post-staging new employers works as originally intended.
The Regulations will:
View the Regulations.
Implications for cryptocurrency trading, smart contracts and AI
Decree No. 228 of 2019 (Decree 228/2019) came into effect on 27 August 2019, which simplifies and revokes previous decrees of the Ministry of Employment (MoE) to widen the type of job titles allowed for foreign professionals to work in Indonesia.
The Indonesian Investment Coordinating Board (BKPM) enacted BKPM Regulation 5/2019 to amend last year’s implementing regulation on guidelines and procedures for licensing and facilities under Indonesia’s foreign direct investment (FDI). The new regulation particularly includes requirements on divestment obligations for foreign direct investment companies.