Pensions; Warning from Action Fraud to #ProtectYourPension and more.

 

 Contents:

• TISA responds to consultation on increasing the normal minimum pension age
• Updated guidance - topping up the Basic State Pension
• PDP reaches "significant milestone" as it looks for digital architecture supplier
• TPR publishes automatic enrolment declaration of compliance report
• Warning from Action Fraud to #ProtectYourPension as £1.8 million lost to pension fraud so far this year

 

TISA responds to consultation on increasing the normal minimum pension age

(AF3, FA2, JO5, RO4, RO8) 

The Investing and Saving Alliance (TISA) has published its response to HM Treasury's Increasing the normal minimum pension age: consultation on implementation. In the response, TISA states that it understands the reasoning behind the intention to move back the normal minimum pension age to 57, in order to maintain a link to the state pension age and to help protect savers from eroding their private pension pots too early. Renny Biggins, Head of Retirement at TISA, said: “We [...] expect both state and private minimum pension ages to periodically increase to broadly maintain the same ratio between expected length of working life and retirement. With this is mind, it is important that the approach undertaken to increase the normal minimum pension age in 2028 and in the future is consistent, and applies the fundamental principles of fairness, simplicity, and certainty.”

 

 

 

​ Updated guidance - topping up the Basic State Pension

(AF3, FA2, JO5, RO4, RO8)

The DWP has published updated guidance for Basic State Pension top ups, (i.e. top ups to pre 6 April 2016 State Pensions) for those who reached State Pension age between 6 April 2010 and 5 April 2015

The DWP’s updated guidance applies to:

• men born between 6 April 1945 and 5 April 1950; and
• women born between 6 April 1950 and 5 October 1952.

If these individuals are not receiving or expecting to receive a full Basic State Pension, then they may be able to improve the amount they get by paying up to six additional years of voluntary Class 3 National Insurance contributions for years going back to 1975, if they:

• reached State Pension age between 6 April 2010 and 5 April 2015, and
• already have 20 qualifying years, including any full years of Home Responsibilities Protection (HRP)*

This is in addition to the opportunity they may already have to pay voluntary contributions for some of the last six tax years.

*HRP protected the National Insurance record of carers for the time they spent caring for children under 16, or for a sick or disabled person, for at least 35 hours a week; and, from 2003, approved foster carers. From 6 April 2010, HRP has been replaced with a weekly National Insurance credit to count towards the State Pension.

The weekly cost of voluntary contributions is £15.40 in 2021/22, or £800.80 a year, for each complete year that an individual buys. They may not need to pay for a whole year if they have already paid some contributions or have some credits for the tax year they want to pay for.

Each extra year they pay for will increase their basic State Pension by 1/30th of the full basic State Pension. The full basic State Pension is £137.60 a week from April 2021 and a 1/30th increase is around £4.59 a week. Voluntary contributions cannot increase their basic State Pension above the full rate.

The voluntary contributions will increase their basic State Pension from when their payment is received. This means the increase will not be backdated to their State Pension age.

Things to consider before paying voluntary contributions

State Pension rules changed from 6 April 2010. One of the changes means that individuals will only need 30 qualifying years for a full basic State Pension. Most of the rules for receiving Bereavement Benefits, which may be payable to their spouse or civil partner when they die, also changed.

Bereavement Benefits were replaced by Bereavement Support Payment from April 2017. Voluntary contributions will not be used to qualify for this benefit.

Not everyone who can pay voluntary contributions will benefit from paying them.

The DWP gives some examples of circumstances that might mean an individual would gain little or no benefit from paying voluntary contributions:

• an improved basic State Pension may reduce any income-related benefits, for example Pension Credit or Housing Benefit, that they or their partner currently get or may get in the future;

• an improved basic State Pension may mean they pay more tax, because State Pension is taxable;

• they may be able to use contributions from their late spouse or civil partner, or former spouse or civil partner to improve their basic State Pension – so they may not need to pay extra voluntary contributions;

• Bereavement Allowance and Widowed Parent’s Allowance were replaced by Bereavement Support Payment for new claimants from April 2017. Voluntary contributions will not be used to qualify for this new benefit

It’s important for anyone considering making voluntary contributions to check whether they would be better or worse off. The decision to pay voluntary contributions may also be affected by:

• their life expectancy;

• the date they and, where appropriate, their late or former spouse or civil partner reach State Pension age; and

• the number of qualifying years they have.

Anyone who has not yet claimed their State Pension can get a provisional State Pension assessment.

Note that there is no automatic right to a refund if, after paying voluntary contributions, an individual decides they have made the wrong choice.

Those reaching state pension age before 6 April 2016 previously had the opportunity to pay Class 3A National Insurance contributions to buy additional State pension, up to a maximum of £25 a week. That scheme started on 12 October 2015 and ran for 18 months, ending on 5 April 2017.

More general information on the Basic State Pension and bereavement benefits is available here and here.

 

 

 

PDP reaches "significant milestone" as it looks for digital architecture supplier

(AF3, FA2, JO5, RO4, RO8)

The Pensions Dashboards Programme (PDP), set up by the Money and Pensions Service (MaPS), has announced an Invitation to Tender for a supplier to provide the digital architecture that will allow savers to view their pensions through their chosen dashboard. This signifies an important milestone, as the supplier will provide the major components of the digital architecture, including the pension finder service, the consent and authorisation service, and the governance register.

Chris Curry, Principal of the PDP at MaPS, said: “We recognise that pension providers, schemes, administrators, trustees and ISPs want certainty and detail around timings and requirements for the delivery of pensions dashboards. With the support and cooperation of interested suppliers, we've been able to outline clear requirements for the dashboards’ digital architecture. The procurement and onboarding of this technical delivery partner is a key moment in our journey. It will enable us to provide our industry partners with more detailed information as we work towards the delivery of pensions dashboards over the coming months.”

 

 

 

TPR publishes automatic enrolment declaration of compliance report

(AF3, FA2, JO5, RO4, RO8)

The Pensions Regulator (TPR) has published its monthly report on automatic enrolment, which sets out information based on data submitted by employers. According to the report, between July 2012 and the end of March 2021, 1,825,615 employers confirmed that they had met their automatic enrolment duties. The report also states that, as of March 2021, 10,457,000 eligible jobholders were automatically enrolled into an automatic enrolment pension scheme during the same period.

 

 

Warning from Action Fraud to #ProtectYourPension as £1.8 million lost to pension fraud so far this year

(AF3, FA2, JO5, RO4, RO8)

Action Fraud is warning savers, in a Press Release, to remain vigilant and protect their pensions, as figures from the national reporting centre for fraud and cybercrime reveal £1.8m has already been lost to pension fraud this year.

There has been an increase in reporting so far this year, with 107 reports of pension fraud received in the first three months of 2021. This is an increase of almost 45% when compared to the same period in 2020.

Action Fraud has launched a national awareness campaign to remind the public about the importance of doing research, before making changes to pension arrangements.

Pauline Smith, head of Action Fraud, said: “Criminals are malicious and unapologetic when it comes to committing pension fraud. They are motivated by their own financial gain and lack any kind of empathy for their victims, who can often lose their whole life savings to these scams.

We know pension fraud can have a devastating impact, both financially and emotionally, but any one of us can fall victim to a fraud and it’s nothing to feel ashamed or embarrassed about. It’s incredibly important that instances of pension fraud, and attempted scams, are reported to Action Fraud. Every report helps police get that bit closer to the people committing these awful crimes. Reporting to Action Fraud also allows our specialist victim-support advocates to provide people with important protection advice and signpost them to local support services.”

Pension scams often include free pension reviews, ‘too good to be true’ investment opportunities, or offers to help release money from your pension even for under 55s, which is not allowed under the pension freedom rules.

The true scale of pension fraud is likely to be much higher than what is being reported, Action Fraud warned. There has been an increase in reporting so far this year, with 107 reports of pension fraud received in the first three months of 2021. This is an increase of almost 45 per cent when compared to the same period in 2020.