Over the next year or two, there is a huge array of legislation affecting pensions that advisers nee...
Over the next year or two, there is a huge array of legislation affecting pensions that advisers need to be aware of.
Within months of the Pensions Act 1995 coming into force, the Government published the Welfare Reform and Pensions Bill. This Bill, enacted last November, contains a large number of amendments to the Pensions Act, as well as the framework for stakeholder pension schemes.
No sooner as this major piece of legislation, most of which has not yet commenced, was on the statute book, than the Government issued the Child Support, Pensions and Social Security Bill.
This latter Bill cleverly glosses over potentially wide-ranging reforms of state pensions (through the replacement of Serps with S2P, the State Second Pension) by seeming to concentrate on the more contentious subject of the Child Support Agency.
To guide advisers as to what changes will impact on pensions next, we hope the tables opposite will help.
They set out (briefly) the change that is coming in, the date it is effective from (if known) and even includes the statutory reference - this may be of help if you are challenged that the change does not exist.
Not all changes that are relevant to pensions are listed. Recent Court cases or determinations by the Pensions Ombudsman are not included, largely because the numbers of these are too numerous.
There is also no mention of the Financial Services and Markets Bill, which has just started its Committee stage in the House of Lords - although this will have large repercussions on pension and other financial service providers, its effect on pension schemes should be limited.
There are many important changes occurring and advisers need to keep on top of events as they unfold. However, it is worth noting one particular change that happened this month.
Late payment of contributions
From 3 April 2000, the Occupational Pensions Regulatory Authority (Opra) has new powers to impose civil penalties for certain breaches of the Pensions Act 1995, most notably for late payment of employees contributions and the late production of audited accounts.
In the past, breaches of this nature have only been punishable as a criminal offence and this has restricted the number of successful prosecutions Opra have been able to bring.
However, now that Opra will be able to bring a civil action, it will make it far easier for them to take disciplinary action against offenders.
In the words of Opra Chairman, John Hayes: "For the first time we are anticipating fining a large number of people for these very serious breaches of the Pensions Act".
Opra's aim is to change "the behaviour of employers who persistently take a casual approach to the money that they have deducted from employees' wages.
"If they don't change their ways in this coming year, greater numbers of employers will be hit in the pocket through increasing fines from us. Our staff are busy at the moment planning the best way of handling the work that will follow the new civil regime Š".
To help communicate these changes, Opra has recently produced two booklets; one looking at paying contributions on time, and one covering audited accounts and auditor's statements. Copies of both booklets are available from Opra.
Advisers also need to be aware of two other areas of the law. Firstly, a new Data Protection Act came into force on 1 March 2000.
The 1998 Act, which replaces the 1994 Act, requires all new pension schemes to notify the Data Protection Commissioner and to comply with the new provisions. Many forms of manual data are now protected under the Act, and specific consents are needed for processing certain data. Existing pension schemes have until 24 October 2001 at the latest to comply.
Secondly, there is a whole raft of new employment law being introduced as part of the Employment Rights Act 1999. These include improvements regarding parental leave (as from 15 December 1999), requirements for part-timers to be treated no less favourably than full-time staff (as from 7 April 2000) and improvements regarding maternity leave (as from 30 April 2000).
Also on the employment law front, various changes have been made, or are about to be made, in connection with the outsourcing of public sector services
There continues to be a vast array of changes affecting pensions over the coming months. Advisers need to keep abreast of developments if they are to be able to successfully advise their clients and help them survive in an increasingly competitive and litigious business world.
Chris Bellers is the technical manager at Friends Provident
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