Zusätzliche Altersvorsorge (freiwillig)
Regulatory Framework
2017: Pension Schemes Act; The Act's primary aim is to provide for the greater regulation of master trusts. From April 2017 occupational pension schemes that are within the definition of a Master Trust as set out in the Pension schemes Act 2017 will be expected to meet new requirements. The Pension Schemes Act 2017 places duties on those involved with Master Trusts to report certain events to us that may indicate that the scheme cannot continue to operate, known as ‘triggering events'. Trustees are also prohibited from increasing or introducing new member charges during a triggering event period. Certain events (as set out in section 22(6) of the 2017 Act) are ‘triggering events'. These duties apply retrospectively back to 20 October 2016.
2015: Pensions Schemes Act 2015; introduced new flexibilities for people saving into defined contribution pension schemes.
2014: Pensions Act 2014; contains provisions to roll-out the single tier State Pension and bring forward the increase of the State Pension Age to 67.
2013: Public Service Pensions Act 2013; introduced the framework for the governance and administration of public service pension schemes and provides for an extended regulatory oversight by TPR.
2011: Pensions Act; amended legislation around the timing of the increase in State Pension age to 66, automatic enrolment into workplace pensions (earning threshold for eligibility, timing, simplification and waiting periods), use of CPI rather than the RPI for the general measure of inflation for up-rating of social security benefits, State Pensions and public sector pensions (and PPF compensation payable).
2008: Pensions Act; further develops the requirements for personal accounts, placing responsibilities on employers to enrol employees automatically in a personal account arrangement (or in a qualifying occupational pension scheme); provides for the extension of the role of the Personal Accounts Delivery Authority and for some changes to the Financial Assistance Scheme and the sharing of compensation from the Pensions Protection Fund in the event of divorce; The Pensions Regulator was given a duty to maximise employer compliance with the employer duties and the employment safeguards introduced by the Pensions Act 2008.
2007: Pensions Act; establishes the Personal Accounts Delivery Authority in initial start-up form; abolishes contracting-out of the State Second Pension (S2P) for defined contribution pension schemes; increases the level of payments from the Financial Assistance Scheme.
2005: Finance Act; further amends the new tax approval regime introduced by Finance Act 2004.
2004: Pensions Act; establishes The Pensions Regulator (TPR) to replace the Occupational Pensions Regulatory Authority (OPRA), with extensive new powers to monitor and regulate trust-based pension arrangements; establishes a register of occupational and personal pension schemes; imposes reporting (whistle-blowing) requirements on trustees and on professionals advising pension schemes; establishes the Pension Protection Fund (PPF) to provide compensation to members of pension schemes where the sponsoring employer becomes insolvent and the scheme does not have sufficient resources to buy out the benefits at the PPF compensation level on a commercial basis.
2004: Finance Act; changes the regime for tax approval of pension schemes to remove restrictions on benefit design of defined benefit schemes and provides tax privileges more flexibly on all pension scheme benefits up to the so-called Lifetime Allowance, with an upper limit also on contributions that can be made on a tax-efficient basis in each tax year; this legislation largely replaces the relevant provisions of the Income and Corporation Taxes Act 1988 and the Finance Acts 1986 and 1989.
2000: Child Support, Pensions and Social Security Act; introduces the State Second Pension (S2P) to replace the State Earnings-Related Pension Scheme (SERPS) and alters rules for contracting out", member-nominated trustees and winding up of occupational pension plans. The ability of Defined Benefit (DB) schemes to contract-out of the State Second Pension ended on 6 April 2016, following the introduction of the single tier state pension. For employers with DB schemes which remain open to future accrual, this will increase National Insurance (NI) costs for employers and members. 1999: Welfare Reform and Pensions Act; defines "stakeholder pensions" and requires that employers must provide access to them, specifies rules for pensions sharing on divorce.
1997: Finance Act; removes the right of pension funds to recover Advanced Corporation Tax (ACT) in respect of dividends on company shares in which they are invested.
1995: Pensions Act; establishes the Occupational Pensions Regulatory Authority (OPRA) and the Pensions Compensation Board, sets requirements for certification of contracted-out plans, requires the establishment of internal dispute resolution mechanisms and equal treatment of men and women and establishes minimum funding requirements for defined benefit plans.
1993: Pension Schemes Act; consolidates earlier law on occupational and personal pension plans, including requirements for "contracting out" of the State Earnings-Related Pension Scheme (SERPS), protection of early leavers, protection of rights and the role of the Pensions Ombudsman.
1992: Social Security Contributions and Benefits Act; consolidates earlier law setting out benefits in the State Earnings-Related Pension Scheme to be given up by members of "contracted-out" occupational and personal pension plans.
1990: Social Security Act (now consolidated into later acts); establishes the Pensions Ombudsman.
1989: Finance Act; introduces a limit on the amount of earnings on which benefits and contributions of subsequent members of tax-approved plans may be based.
1988: Income and Corporation Taxes Act; defines the rules regarding the tax qualification of company pension plans (largely replaced by the Finance Act 2004).
1986: Finance Act; introduces limits on the surplus which may be held tax-free within approved pension schemes and encourages scheme sponsors to increase benefits or reduce contributions to restrict the build-up of surplus in the scheme.
1975: Social Security Pensions Act; introduces the State Earnings-Related Pension Scheme (SERPS), implemented from April 1978 (and replaced from 2002 by S2P in accordance with the Child Support, Pensions and Social Security Act 2000).
Occupational pension plans were first regulated by the 1834 Superannuation Act, long before the introduction of social security pensions."
Plan Profile
- retirement
- death
- having reached a particular age
- serious ill-health or incapacity, or
- similar circumstances.
A pension scheme does not have to provide benefits in all of these situations. For example, if a scheme provides only death in service benefits it would still fall within the definition of a pension scheme.
Under Section 150(2) Finance Act 2004, a registered pension scheme is a pension scheme that is registered under Chapter 2 of Part 4 of the Finance Act 2004 because either:
- an application to be registered has been made and the scheme has been registered by HM Revenue & Customs (HMRC),
- or the scheme is treated as automatically registered.
The main benefit of a pension scheme being registered is the availability of certain tax reliefs and exemptions.
A pension scheme is automatically registered because it was either:
- an approved pension scheme on 5 April 2006 and before 6 April 2006 did not opt out of becoming registered, or
- it is a deferred annuity contract purchased on or after 6 April 2006 to secure benefits under a registered pension scheme.
If a scheme is not a registered pension scheme it may be an employer financed retirement benefit schemes (EFRBS). An EFRBS is a scheme that can pay certain retirement or death benefits for employees or former employees called ‘relevant benefits'. The establishment of an EFRBS should be reported to HMRC.
There's no tax relief for employee contributions to an EFRBS and such schemes do not get any of the explicit tax advantages that registered schemes get. For example, an EFRBS should pay tax on its investment income. Employers can get deductions on their contributions to EFRBS as expenses but this is tied to the member being charged on their benefit, so the normal business reliefs that exist for the employer can be deferred if and when the income tax charges are deferred for the employee. When benefits are taken from an EFRBS, any lump sum is treated as employment income and taxable on the employee primarily under the Pay as You Earn (PAYE) - the system used by UK employers to deduct income tax and national insurance contributions before paying a person's wages.
Plan sponsors
Types of plans
Institutional Framework
- a trust
- a contract
- a board resolution
- a deed poll
The Department for Work and Pensions' legislation imposes requirements on certain occupational pension schemes. In addition to the document establishing the scheme there will be a set of rules covering:
- the type of benefits that are to be provided through the scheme
- how these are to be funded
- when they may be paid
- to whom they may be paid
- how funds may be invested.
A pension scheme is automatically registered either because:
- it was set up and tax ‘approved' on 5 April 2006 and before 6 April 2006 didn't opt out of being a registered scheme, or
- it is a deferred annuity contract purchased on or after 6 April 2006 to secure benefits provided under a registered pension scheme.
An application to register a pension scheme with HMRC can only be made if the pension scheme:
- is an occupational pension scheme
- is a public service pension scheme, or
- has been set up by a person with permission from the Financial Conduct Authority (FCA) under the Financial Services and Markets Act 2000 to establish in the UK a personal pension scheme or a stakeholder pension scheme.
A registered pension scheme must have a scheme administrator - the scheme documentation must make provision for this. The scheme administrator is the person appointed in accordance with the scheme rules to be responsible for complying with the functions and responsibilities of a scheme administrator under the Finance Act 2004. To be registered with HMRC, the scheme documentation cannot entitle any person to unauthorised payments. When the scheme administrator applies for registration of the scheme they have to make a declaration to this effect.
The scheme administrator can be an individual or an organisation such as an employer or specialist pension administration company, or a mixture of both. More than one person can be the scheme administrator. If more than one person is appointed as scheme administrator, each is jointly and severally liable for any tax charges or penalties due on the scheme administrator. Administrators of UK pension schemes must be resident in the UK, or in an EU or wider EEA state.
Pension schemes set up under a ‘trust deed' must have trustees in place to provide oversight and compliance with the trust deed and rules. Trustees of occupational pension schemes are required to put in place and implement arrangements to provide that at least one-third of the trustees are member-nominated trustees (MNTs). MNTs are trustees who are nominated as a result of a process which must involve at least all the active members of the scheme or an organisation that adequately represents them; and all the pensioner members of the scheme or an organisation that adequately represents them; and are selected by some or all of the members of the scheme. The arrangements must include a nomination process and a selection process, and they must comply with other statutory requirements.
Trustees have specific responsibilities under pensions legislation, of which the main ones are:
- preserving the assets of the plan and applying them and the income for plan members and beneficiaries (fiduciary responsibilities);
- articulating a Statement of Investment Principles after taking appropriate advice and agreeing this with the sponsoring employer(s);
- appointing an investment manager or managers and delegating to them the day-to-day management of the investments of the plan;
- monitoring the implementation of the Statement of Investment Principles, including ensuring that restrictions on self-investment in the sponsoring company are met;
- appointing the scheme auditor;
- ensuring requirements are met regarding the annual audit of the plan and the timely publication of the audited annual report and accounts;
- appointing the scheme actuary;
- ensuring that a full actuarial valuation is carried out every three years and that actuarial reports are prepared every year;
- Putting in place a recovery plan if the reports show a deficit;
- Appointment of legal advisors;
- the disclosure of certain information to plan participants such as conditions of membership, individual rights, annual benefit statements, the identity of trustees and advisors, the funding position of the plan, the Statement of Investment Principles, etc.;
- developing a Statement of Funding Principles and determining the assumptions for the calculation by the actuary of the technical provisions;
- establishing a Schedule of Contributions, obtaining the agreement of the sponsoring employer(s) and monitoring the compliance of employers with the Schedule;
- establishing an internal disputes procedure.
- Notifying TPR of certain events, breaches and providing TPR with a scheme return.
The management of contribution and benefit administration may be undertaken by employees of the trust or it may be contracted out by the trustees to a pension management company, third party administrator or financial institution.
Plans may also be insured, whereby the management of the plan contracts with an insurance company either to provide pension benefits or to invest the contributions. Large employers' plans tend to be self-administered by the trust, whereas small employers' plans are frequently insured.
Coverage
The reforms required employers to automatically enrol eligible workers into a qualifying workplace pension scheme and make a minimum contribution. The automatic enrolment duties were staged between October 2012 and February 2018 by employer size, starting with the largest employers. Workers are eligible provided they: are aged at least 22 and under State Pension age; earn over £10,000 per year in 2022/23 (these thresholds are reviewed annually); normally work in the UK and do not currently participate in a qualifying workplace pension scheme. Current legislation specifies total minimum contributions are 8 per cent, of which at least 3 per cent must come from the employer.
Through automatic enrolment almost 11 million people have been enrolled into a pension scheme by over 1 million employers. The government is keen that as many people as possible can benefit from their own long-term saving, topped up with employer and government contributions, to give them greater financial security in retirement. In 2017 the government conducted a review of automatic enrolment to consider the success of the policy to date, and explore ways in which it can be further developed. The review gathered evidence on groups such as people with multiple jobs who do not qualify for automatic enrolment in any single job. It also considered how the growing numbers of self-employed people can be helped to save for their retirement. A number of recommendations were made around the scope of those eligible for automatic enrolment, and the earnings thresholds, as well as contribution rates. The UK government is considering the recommendations and the extent to which they may be implemented, and when.
Financing / Investment
Employers
Any employer or member of a registered pension scheme may make contributions to that registered pension scheme.
Other persons
A person other than a member or the employer of a member may make a contribution to a registered pension scheme in respect of a member of that scheme. A person can be an individual, a corporate body or other legal entity. For tax purposes, any contribution that is not an employer contribution will be regarded as if it had been made by the scheme member. This means the member should receive any tax relief due on the contribution, not the person who made the contribution.
Tax relief
Contributions that are paid to a registered pension scheme may receive tax relief. The tax relief may be through the relief at source (RAS) mechanism, or through a net pay arrangement operated by an occupational pension scheme.
Members
There is a limit on the amount of tax relief a member may receive on contributions paid by them, or other persons in respect of them. Any contributions over the tax relief limit may still be paid into the pension scheme, but no tax relief is due on the excess. If any portion of contributions that obtain tax relief result in the annual allowance being exceeded, there might be a tax charge on the member for exceeding the annual allowance. The current annual allowance for the 2022-23 tax year is £40,000, therefore members can contribute 100% of their earnings up to a maximum of £40,000 and receive tax relief.
Employers
Unlike for scheme members there is no set limit on the amount of tax relief that an employer may receive in respect of its contributions. However, tax relief is not automatic; it will be considered under the normal tax rules as a business expense. There are also special rules for where a large one-off contribution is made. These special rules allow tax relief to be spread over several years rather than be given in full in the year that the contribution is actually paid.
The UK government has set minimum levels of contributions that must be paid into workplace pension schemes by employers and members. The minimum total contribution to the scheme is usually based on the member's ‘qualifying earnings', which are earnings from employment, before income tax and National Insurance contributions are deducted, that fall between a lower and upper earnings limit set by the Government. Under automatic enrolment legislation, employers must pay some of the minimum total contribution. If an employer doesn't pay all of the minimum total contribution, the member will be required to make up some of the difference. The Government also contributes by giving tax relief on the contributions.
As explained above, the minimum contribution is 8% of which at least 3% must be paid by the employer. However the employer and member can choose to pay more than the minimum contributions if they wish. All automatic enrolment pension schemes with contribution rates that would be below the minimum amount after the rate increases, must apply the higher rates in order to remain a qualifying scheme. If a pension scheme does not increase its minimum contribution levels in line with the legal requirements, it will no longer be a qualifying scheme for existing members and cannot be used for automatic enrolment. Pension scheme trustees and providers, and payroll and software providers, should ensure their products support this legal requirement of automatic enrolment.
Sources of funds
Employee contributions
Employer contributions
Other sources of funds
Methods of financing
Asset management
Benefit provisions
Acquisition and maintenance of rights
Waiting period
Vesting rules
Preservation, portability, transferability
Retirement benefits
Benefit qualifying conditions
Benefit structure / formula
Benefit adjustment
Survivors
Disability
Protection of Rights
A key objective for trustees of defined benefit pension schemes is paying the promised benefits as they fall due. The ability to fulfil this important aim is enhanced if the employer supporting the scheme is successful. Most defined benefit (DB) schemes need to meet the statutory funding objective (see Pensions Act 2004), which is to have sufficient and appropriate assets to cover their technical provisions (accrued liabilities). DB scheme trustees should work closely with the sponsoring employer to agree a:
- statement of funding principles that sets out how the statutory funding objective will be met
- schedule of contributions that is consistent with these principles
- recovery plan if the statutory funding objective isn't met
If the assets are insufficient to cover the technical provisions, the trustees must put in place a recovery plan, with a view to ensuring that the scheme's funding objectives are met over a period of time.
In all cases the trustees must produce a schedule showing the rates of contributions payable to the scheme by or on behalf of the employer and scheme members who are accruing benefits, and the dates by which those contributions are payable.
Trustees of defined benefit schemes should commission a full actuarial valuation at least every 3 years to assess the funding level of their scheme. The actuarial valuation must incorporate the actuary's certification of the technical provisions calculation and the schedule of contributions. The valuation must include the actuary's estimate of the scheme's solvency. The trustees must choose a method for calculating the scheme's technical provisions, i.e. the value of benefits accrued to a particular date and take advice from the actuary on the differences between the methods and their impact on the scheme. Trustees must arrange to have audited accounts or an auditor's statement within seven months of the end of the scheme's financial year.
Protection of Assets
Financial and Technical Requirements / Reporting
Whistleblowing
Standards for service providers
Fees
Winding up / Merger and acquisition
Bankruptcy: Insolvency Insurance / Compensation Fund
Disclosure of information / Individual action
Other measures
Tax Treatment
In the tax year 2022-23 UK taxpayers will receive tax relief on pension contributions of up to 100% of earnings or a £40,000 annual allowance, whichever is lower. From April 2020 the £40,000 annual allowance was also reduced for individuals with an income of over £240,000, including pension contributions. Any contributions made over this limit will be subject to Income Tax at the highest rate paid by the individual. In some circumstances unused allowances can be carried forward but there are some exceptions. If a pension scheme member accesses money from their defined contribution pension, this can trigger a lower annual allowance known as the Money Purchase Annual Allowance or MPAA. The annual allowance for individuals with defined contribution schemes in drawdown reduces to £4,000.
A lifetime allowance puts a top limit on the value of pension benefits that an individual can receive without having to pay a tax charge. The lifetime allowance is £1,073,100for the tax year 2022-23. Any amount above this is subject to a tax charge of 25% if paid as pension or 55% if paid as a lump sum.
Taxation of employee contributions
Taxation of employer contributions
Taxation of investment income
Taxation of benefits
Regulatory and Supervisory Authorities
HM Revenue & Customs
HM Revenue & Customs Pension Schemes Service Responsible for technical tax issues relating to occupational pension plans.
Pension Schemes Services
HM Revenue and Customs
BX9 1GH
Tel.: +44 (0)300 123 1079
https://www.gov.uk/government/organisations/hm-revenue-customs
The Pensions Regulator (TPR)
The Pensions Regulator (TPR) is the public body that protects workplace pensions in the UK. TPR works with employers and those running pensions so that people can save safely for their retirement.
The Pensions Regulator
Napier House
Trafalgar Place
Brighton
BN1 4DW
http://www.thepensionsregulator.gov.uk
Financial Conduct Authority (FCA)
The Financial Conduct Authority is the conduct regulator for 56,000 financial services firms and financial markets in the UK and the prudential regulator for over 18,000 of those firms.
Financial Services Authority
25 The North Colonnade Canary Wharf
London
E14 5HS
Tel.: +44 (0)207 066 1000
https://www.fca.org.uk/
Pension Protection Fund (PPF)
The Pension Protection Fund was established to pay compensation to members of eligible defined benefit pension schemes, when there is a qualifying insolvency event in relation to the employer and where there are insufficient assets in the pension scheme to cover Pension Protection Fund levels of compensation.
The Pension Protection Fund
Renaissance
12 Dingwall Road
Croydon
Surrey
CR0 2NA
Tel : +44 (0)345 600 2541
[email protected]
http://www.pensionprotectionfund.org.uk
Prudential Regulatory Authority
The Prudential Regulation Authority (PRA) was created as a part of the Bank of England by the Financial Services Act (2012) and is responsible for the prudential regulation and supervision of around 1,500 banks, building societies, credit unions, insurers and major investment firms. The PRA's objectives are set out in the Financial Services and Markets Act 2000 (FSMA). The PRA has three statutory objectives:
1. general objective to promote the safety and soundness of the firms it regulates;
2. An objective specific to insurance firms, to contribute to the securing of an appropriate degree of protection for those who are or may become insurance policyholders; and
3. A secondary objective to facilitate effective competition.
Pensions Ombudsman
Official to whom complaints may be made by plan members and dependants about the administration of pension plans. The Ombudsman has authority to rule on disputes between plans and their members.
Pensions Ombudsman
10 South Colonnade
Canary Wharf E14 4PU
United Kingdom
Tel.: +44 (0)20 7630 2200
http://www.pensions-ombudsman.org.uk
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