Atkin trustees, actuaries, consultants & administrators

Current Issues - October 2015

Recovery of VAT on DB Schemes: Many employers are used to recovering VAT on 30% of the fees charged by their pension scheme advisors. Whilst HMRC now acknowledges that employers are potentially entitled to recover 100% of the VAT (subject to any general restrictions on VAT recovery), many may find themselves unable to recover any VAT from 1 January 2016 as they do not meet all of the requirements for VAT recovery. In particular, services must be supplied to the employer, paid by the employer and it has a VAT invoice in its name. We have been suggesting that this is dealt with through having tripartite agreements between the advisors, the employer and the Trustees. However, the Association of Pension Lawyers have suggested an alternative where the Trust Deed and Rules are amended. If accepted by HMRC this maybe a more straight forward option, although we are still waiting to see if HMRC will accept this approach and the end of year deadline is not far off.

Buy-outs – Merger news: Following the changes to DC schemes and the personal annuity market, it appears that a number of annuity providers are either moving into the bulk annuity market or current players are merging to provide a more attractive proposition. This could be good news in terms of more competitive pricing and the ability to obtain quotes which has been an issue of late, particularly for smaller schemes.

Scottish Income Tax – Will your members be affected?: Income tax rates for Scottish taxpayers may change from 6th April 2016, so Schemes with members based in Scotland will need to prepare.

DB Transfers – FCA considers whether existing procedures are inhibiting free choice: This may make it easier for members to transfer from DB schemes to DC schemes but, as it is only at the consultation stage, it is more of a watch this space.

PPF publishes details of the 2016/17 levy: The Pension Protection Fund (‘PPF’) chosen to keep the levy rules substantially the same as in 2015/16 and intends to collect £615 million, £20m less than in 2015/16. Although, as this appears to be driven by improvements in insolvency risk scores, those that have not seen an improvement may see their levy increase. There is also bad news for those Schemes that incorrectly identified themselves as Last Man Standing Schemes, as the PPF has decided that it will re-invoice these schemes for the historic underpayments. The PPF also provided confirmation on which mortgages need to be re-certified (immaterial mortgages only).

Finally, the PPF has responded to feedback that its scorecard methodology does not fit with certain types of company structure.  It noted that its model uses statistical analysis and there is likely to be insufficient data on which to judge whether any proposed alternative would contribute to (or reduce) predictability.  It does not therefore propose to make any changes for 2016/17 but will reassess this in the lead up to the end of the first levy triennium (in 2018).

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With our previous advisors we very rarely went to them for consultation advice, as we had little faith in them. We tended to use solicitors, and to that extent the cost to the Company has been significantly reduced, and we are very happy with Atkin & Co’s approach and guidance here. We are all more than happy with our move to Atkin & Co.

Paul, Administration and Actuarial client