A draft Statutory Instrument for option three in the Treasury's consultation paper on the regulation of Self invested personal pensions has been published on the HM Revenue & Customs website almost two months before the end of the consultation period.
Publication of the statutory instrument, even in the draft section of the website, strongly suggests the Treasury is pressing ahead with its favoured option of the four mentioned in the Proposed changes to the eligibility rule for establishing a pension scheme, despite the consultation on the issue not ending until 23 December.
Scheduled for 2006, it is the only statutory instrument published which supports one of the consultation paper’s options. There have so far been no draft regulations or statutory instruments which match any of the other three.
John Lawson, marketing technical manager at Standard Life, says: “By publishing this document they are basically saying that it is a done deal, they’ve published the draft regulations and said we’re going ahead with option three. In this case what was the point of having a consultation process in the first place? Why not just say this is what we’re doing and that’s it? They haven’t bothered to put out draft regulations for any of the other options, they have just put this out before the consultation period has ended and although it could be amended they are basically saying this is what is going to happen unless there is some serious objections.”
Gerogina Miles, a spokeswoman for the HMRC, denies the decision has already been made and states the document is just a draft to show what the legislation would look like if the government were to proceed with its preferred option three.
Miles says: “This is not pre-empting the outcome of the consultation. Option three would involve amending an Order made under the Financial Services and Markets Act, and we felt it was desirable to show how that amendment would be made.”
Meanwhile Alasdair Buchanan, group head of communications for Scottish Life, says that the move is less surprising considering how clear the consultation paper was in favouring option three.
He adds: “It’s an interesting point that they’ve done this in the middle of the consultation period, but it seems it is probably a timing issue where it will just sit in the draft section waiting to see what happens. It doesn’t seem that it will have much meaning in the great scheme of things, but is interesting nonetheless.”
And Rachel Vahey, pensions development manager at Scottish Equitable, says: “The Government have been very open in the consultation paper that they favoured option three, so what we think they are doing is preparing the ground and trying to get ready for the Financial Services Authority (FSA) to go and consult on the issue of regulation. Even if the FSA are ready to consult early next year, it is still an extremely fast time-frame to try and get everything done by April 2007. This document may make it an easier transition if all goes according to their plans, but it doesn’t signify that’s it’s a ‘done deal’, they will still have to take into account the consultation period and any views that are raised through that process.”
The statutory insutrument makes amendments to the appropriate sections of the Finance Act 2004, consistent with option three of the Treasury’s consultation paper. It also adds a new category of people eligible to establish a pension scheme from April 2007, which is: “any person with permission to carry on the regulated activity of managing investments or safeguarding and administering investments”.
Under the proposals in the Treasury consultation paper, option three will create a new regulated activity of establishing, operating and winding-up a personal pension scheme, from April 2007. This means that it is extremely likely there will be a “gap year” during which Sipps, not containing regulated investments such as OEICs, unit trusts and insurance policies, will be unregulated.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected].IFAonline
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