Important legislative changes and service improvements – your essential review of 2021
It’s been another turbulent year, with supply chain issues, Brexit and Covid-19 dominating the economic headlines. So, as is customary at this time of year, we asked associate director, James Randall, to look back at 2021…
Before starting this post, I looked back at what we wrote this time last year when the world was still in the middle of the Covid-19 pandemic. While the world still looks very different to how it did pre-March 2020, we have all had a further 12 months to adapt to “the new normal”.
Here at IPM, we continue to mix our working arrangements between the office and our homes. Although the increase to the numbers in our office have been curtailed by recent government announcements regarding the Omicron variant, we are delighted to have been able to continue to provide our advisers and clients with consistently high levels of support throughout the year.
We will continue to update our Covid-19 page with any changes to operational matters and topics we feel are important to highlight resulting from any disruption caused by the pandemic.
Improving the service we offer you and your clients
Since March 2020 there has been a change in how everyone works; us, the advisers we work with, and the way we interact with clients. This period has given us the opportunity to evaluate how we work and to ask how we can improve.
We have been busy working on some changes behind the scenes. Some of these will be evident while others are more in the background. However, all are designed to enhance the service we offer.
One of the major changes internally has been the introduction of our new phone system. This allows all our team to make and receive calls through the office line regardless of where they are based (although we apologise if we inadvertently cut off anyone in recent months while we all got used to this!). This will continue to ensure that you can always contact our colleagues.
Our online access is continually developing. We have recently increased the information available where clients are in drawdown, and we will be looking to add to this in the future.
A big change we have been working on, due to come into effect in January, is the introduction of electronic signatures on our paperwork.
We appreciate that, in some instances, the requirement for original documentation can cause difficulty, especially given the changes in working practices as a result of the pandemic. Read more about these changes in our latest article.
Legislative changes – Pension transfers
Compared to recent times, the last few years have been fairly quiet for SIPPs in regards to legislative changes.
However, one major change that will impact clients was introduced on 30 November. This is the Occupational and Personal Pension Scheme (Condition for Transfers) Regulations 2021.
The aim of the regulations is to protect clients from pension-related scams where they are making a transfer. They are designed to give the current pension provider the tools to act should they have suspicions about the transfer request. This works by splitting pension transfers into two conditions:
Condition 1
Applies to transfers to schemes that are:
- A public service scheme
- An authorised Master Trust Scheme
- An authorised collective money purchase scheme.
Where a transfer is being made to one of these scheme types and this is confirmed by the trustees and/or scheme managers, the member will be guaranteed their right to transfer.
Condition 2
In short, condition 2 applies to any scheme type that does not fit those laid out in condition 1.
Condition 2 will include many SIPPs and other personal pensions. It requires that certain scam risk indicators, that may be identified as red or amber flags, are assessed by the transferring scheme.
Red flag indicators include, but are not limited to:
- Checking to see whether a person without the suitable regulatory authority has been involved in the proposed transfer
- The member has been offered an incentive to transfer or the member feels they have been put under pressure to make the transfer.
If a red flag is present, the trustees can prohibit a transfer from taking place.
Amber flag indicators include, but are not limited to:
- Where the trustee and/or managers of the transferring scheme decide that there are high-risk or unregulated investments in the receiving scheme
- There are unclear or high fees being charged by the receiving scheme
- There has been a sharp or unusual rise in the requests to transfer to the receiving scheme.
If any amber flags are present, written evidence that the member has obtained specific guidance from the Money and Pensions Service (MaPS) will be required before the transfer can proceed.
You can find full details of the Occupational and Personal Pension Scheme (Condition for Transfers) Regulations 2021 on the government website.
As will be the case with most SIPP transfers, we suspect that a transfer to IPM will result in an amber flag being raised.
This will require the transferring scheme to put additional measures in place before a transfer can take place. This onus will fall on clients, as it is important to note that this cannot be undertaken by an adviser on their behalf.
Given the short period of time between these rules being confirmed and their implementation, it is likely that transferring schemes are going to have varying degrees of requests before a transfer to a SIPP can take place.
We will continue to monitor the impact of the new regulations on working practices and will aim to pre-empt many of these where possible.
However, certainly in the short term, the length of time it takes to transfer benefits from one scheme to another will increase and will involve the ceding scheme making direct contact with the scheme member.
Top 5 IPM articles from 2021
Thanks to all of you who have read our regular updates in 2021. In case you missed any of our blogs, here are your top five most popular articles from 2021.
Back in September, the prime minister announced that the rate of National Insurance contributions (NICs) would rise by 1.25 percentage points from the 2022/23 tax year.
This article considered how pension contributions could help mitigate the NIC rise, and ways in which clients could plan tax-efficiently.
Benefits held in a pension scheme do not form part of a client’s estate. Therefore, a will does not have any impact on how these benefits are distributed on death.
This article looked at vital information about death benefits and SIPPs that you and your clients need to know.
When considering SIPPs and commercial property, you may immediately think of shops, offices or factories.
However, it is possible to hold a range of premises in a SIPP, and this article looked at 11 weird and wonderful properties clients held in their pensions.
We’re always looking for ways that we can improve the service we provide to you and your clients.
Back in June, we added a new member to our property team, ensuring we can continue to deliver a first-class service.
While there are lots of positive reasons why your client might want to consider a self-invested personal pension (we would say that, wouldn’t we?!), there are also times when it may not be the correct approach.
In this article, read about why a SIPP might not be the right choice for your client, especially when it comes to a property purchase.
Get in touch
If you want to have a chat about the potential of SIPPs for your clients, or any other aspects of pension planning, please contact us. Email info@ipm-pensions.co.uk or call 01438 747 151.