Regulatory unintended consequences and Europe stealing our pensions - here is the week in news.
1) Pension scam rules
There was horror in the small self-administered schem market this week as it is feared that pension scams regulation could halt transfers in and schemes can be de-registered due to dormant employers.
The new rules require trustees to check their receiving scheme is regulated by the Financial Conduct Authority (FCA), or has an active employment link with the individual, or is an authorised master trust.
Richard Mattison, director at Ssas provider Whitehall Group, said a proportion of people wanting to transfer their pots into a Ssas might be prevented from doing so as a result of this requirement.
He said: "Ssas are for business owners, and these individuals do not always draw remuneration from their companies. So, there might be no way of establishing this employment link."
To the add to the horror Rupert Curtis, group chief executive of Curtis Banks said that one of the solutions for the hurdles caused by the new legislation would be to transfer to a self-invested personal pension (Sipp).“They are very much identical products in most respects these days,” he said.”
2) PAYE loan moan
If things weren’t exciting enough PAYE charges on outstanding loans is the missing piece in HM Revenue & Custom’s disguised remuneration proposals, according to Andrew Hubbard, tax consultant at RSM.
He claims the key weapon in the government’s latest attack on employee benefit trust and other arrangements is the PAYE charge on loans outstanding on 5 April 2019, regardless of when the loan was taken out.
When the loan charge was first announced HMRC said that in some cases responsibility for payment of the tax may shift from the employer to the employee.
But Mr Hubbard said: “We still do not know how this shift will work and when it will be invoked. It is leading to considerable uncertainty and we urge the HMRC to find the missing pieces of the jigsaw as soon as possible.”
A puzzle indeed.
3) Brexit eats pensions
As if the powers that be in Europe are not being difficult enough about Brexit they only want to nick British expats pensions, according to MP Nicky Morgan, head of the Treasury select committee.
According to Ms Morgan hundreds of thousands of long-term pensions and insurance policies were at risk, unless the government takes action to secure the future of these contracts.
The problem arises because UK-based insurance companies sell a variety of long-term contracts, like pensions, to customers elsewhere in the European Union using passporting arrangements. The same happens in the opposite direction, with European Union insurance groups selling policies to people and businesses in Britain.
Ms Morgan wans that after Brexit, insurers may not be allowed to pay out on cross-border contracts already in place.