National Pension Saving Scheme

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National Pension Saving Scheme

• PERSONAL ACCOUNTS!
• or whatever name they come up with next!
• State Second Pension due 2012

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Draft revised guidance

• On the scope of the TKU requirements
• Well
• Who can tell me what TKU stands for?

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TKU requirements

• Trustee Knowledge and Understanding (TKU)
• Draft revised guidance on the scope of the TKU
  requirements
• (Scope guidance)
• Defined contribution schemes

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Are things Bad in pensions?

• PMI SPRING CONFERENCE 2009
• PENSIONS APOCALYPSE!
• Post financial Meltdown

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Key dates you need to know!
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Retirement ages direct from TPR

• 65 to 66, will be phased in between April 2024
  and April 2026
• 66 to 67, will be phased in between April 2034
  and April 2036
• 67 to 68, between April 2044 and April 2046.
• TPR is The Pensions Regulator!

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(No Transcript)
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Pensions Act

• Pensions Act 2008 focussed on personal accounts
  introduces compulsory pension provision
• THE GOOD NEWS IS YOUR OLD HIGH CHARGE GPPS LOOK
  OK!!!
• May be subject to change!!!!

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Pensions Act

• Personal Accounts Delivery Authority
• PADA

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STAKEHOLDERS

• Post 2012 no need for an employer to designate a
  Stakeholder

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.

• Phased in from 2012
• Employers will need to automatically enrol
• Pay a contribution of 3 for those who remain
  members.
• The key requirements from 2012 are
• Auto-enrol all jobholders in a pension scheme if
  they are aged between 22 and state pension age
  and earn more than 5,035.

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Contributions

• A contribution of 8 of band earnings must be
  paid, with the employer paying at least 3.
• E.g. Employee 4 Employer 3 tax refund 1

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Opt-out

• People can opt-out of the scheme and, if they do,
  no contributions need to be made on their behalf.

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• Employers need to re-enrol employees who opt-out,
  at least once every three years.
• Employers can choose to use a good quality
  private scheme.
• Band earnings are earnings between 5,035 and
  33,540 (in 2006/07 earnings terms).

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Old contracting out problems?.

• Sales staff
• Overtime
• Contractors
• Self employed
• Short term contracts
• Commission only

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Bribe them not to join?.

• No.
• One off bonuses or cash inducements not to join
  are not allowed

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What is a good quality private scheme?

• It looks like there is no cost limit Like a
  stakeholder ?
• But it could change
• DB could be back?
• Contracted Out at 1/80th
• Contracted In at 1/120th
• Existing Stakeholders are VERY likely to be OK

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• Government personal accounts scheme or a
  combination of the two to fulfil their
  responsibilities.
• Opportunity for the IFA to Make Money?
• Threat and an opportunity to advisers working in
  the corporate market.

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• Opportunity arises as employers can use any type
  of pension scheme
• Such as a group personal pension occupational
  defined contribution scheme Switch to
  automatic enrolment,
• Will see average take-up increase
• Increase in members increase in commission!!

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• PLUS ALL employers who dont have a pension
  scheme, or dont have schemes covering all of
  their workforce need to introduce provision, and
  some will opt to use private schemes rather than
  personal accounts.

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Transfers

• There will be a general prohibition on transfers
  to and from the personal accounts scheme. This
  will be reviewed in 2017.

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Top ups

• Likely to be allowed
• Probably 10k in year one
• Possibly extra in final year before retirement?
• Could be very cost effective as near retirement.

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• Its clear a compulsory 3 employer contribution
  and auto-enrolment will shake up the current
  market.

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SO WHATS THE THREAT?
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Threat?

• THREAT one?
• Employers currently paying more than this may
  consider reducing contributions to offset the
  cost of the additional members.
• Lots of work for you and less commission!

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Threat Two?

• Individuals paying pensions will be better off in
  their employers scheme.
• Claw back and no future sales.

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Threat three

• Other employers will have to boost their
  payments to 3 plus the increase arising from
  higher membership.
• Could be good news for IFAs

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Opportunity?

• This is why employers will need help working out
  suitable strategies to cope with any increase in
  cost.

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Now time to act

• The impact will vary enormously so, whatever the
  employers circumstances, the need for financial
  advice has never been greater.

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Now time to act

• Many advisers are out there NOW
• Talking salary sacrifice, and Phasing in early.
• Existing Schemes seem to be OK
• Dont assume they will still be OK

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More Info?
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The Pension Service

• Useful site
• http//www.thepensionservice.gov.uk/home.asp
• Use the governments own stuff
• As well as
• Your pet provider site

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Pension transfer or switch

• Financial Services Authority
• Using the FSAs pension-switching advice
  suitability assessment template
• February 2009

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Limitation of scope
This template applies only to advice on switches
from a defined contribution pension scheme to a
Personal Pension Plan (PPP) or Self-invested
Personal Pension (SIPP). It does not cover the
requirements for transfers from defined benefit
occupational schemes or switches to use drawdown
flexibility immediately.
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Important legal note
This template does not constitute Handbook
guidance it does not define the suitability
standards for pension-switching advice. Firms
should have regard to this communication as FSA
supporting material, which is intended to help
firms comply with the FSAs rules and
Principles.
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Important legal note
There may be several ways of complying with a
regulatory requirement and following guidance or
other material we publish, such as this, is only
one approach.
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Important legal note
A firms senior management remain responsible for
establishing and implementing effective controls
over the conduct of pension-switching advice.
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Financials Plan
Training seminars 3 hours long Cpd
certificate 55 vat Or bespoke for your
company at 500 vat

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Pension transfer or Switch

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How we will meet our objectives

• Compliant File minimum requirements
• Fact Find
• Attitude to Risk
• Soft Facts
• Research existing products
• Research- Stakeholder
• Research- other solutions
• Suitability Report

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How we will meet our objectives
Presentations Experienced practitioners and
advisers Workshop case studies
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Objectives

• To identify the evidence currently needed to be
  held on file in support of a pension switch to -
• Meet COBS rules
• Meet TCF needs
• Satisfy an FSA visit/ check
• Including the new FSA Checklist!
• Win at FOS, i.e. successfully rebut a complaint