DWP call for evidence "Review of the Default Fund Charge Cap and Standardised Cost Disclosure"
The government has consulted on a review of the charge cap which applies where individuals are automatically enrolled into a pension scheme. The consultation sought views on the level and scope of the charge cap, the appropriateness of permitted charging structures and the extent to which they should be limited, and options to assess take up and widen the use of standardised cost disclosure templates. The government intends to publish the findings of the call for evidence by the end of 2020.
Call for evidence re addressing discrepancy in treatment of low earners under net pay arrangements and relief at source
As announced in the Budget, the government has published a call for evidence on the operation of pensions tax relief. The government is concerned about the potential for a low earner's take home pay to be affected by the method of pensions tax relief operated by their pension scheme. The main methods of administering pension tax relief (a) are net pay arrangements under which pension contributions are made through payroll before tax is calculated, and (b) relief at source (RAS) under which an individual's contribution is treated as if an amount equal to basic rate tax has been deducted from it, and the scheme administrator claims this amount from HMRC and adds it to the member's pension pot (regardless of the member's actual tax rate). If an individual has sufficient income to pay at least basic rate income tax, both methods give the same outcome. However RAS is more favourable for individuals who do not earn enough to pay income tax at the basic rate. The call for evidence seeks views on how the differences in outcomes might be addressed. The call for evidence closes at 11pm on 13 October 2020.
Parliament Work and Pensions Committee call for evidence on pension scams
In July Parliament's Work and Pensions Committee called for evidence for the purposes of its investigation into pension scams in the first strand of a three part enquiry into the impact of the introduction of pension freedoms five years on. The Committee asked about the prevalence of pension scams, current trends, what more can be done to prevent scams, what role the pensions industry should have in preventing scams, and whether HMRC's position on the tax treatment of pension scam victims is correct. The deadline for submissions has now passed.