Finance Act 2025 receives royal assent
The Finance Act 2025 has received royal assent. In relation to pensions, the Act:
- Removes the current exemption from the 25% overseas transfer charge (OTC) for transfers to Qualifying Recognised Overseas Pension Schemes (QROPS) established in the EEA and Gibraltar. This change applies to transfers from October 30, 2024 (the date of the Autumn Statement in which the change was announced), unless the transfer was requested before that date and made before April 30, 2025.
- Brings the conditions for overseas pension schemes (OPS) and Recognised Overseas Pension Schemes (ROPS) established in the EEA in line with OPS and ROPS established in the rest of the world, so that: (a) OPS established in the EEA will be required to be regulated by a regulator of pension schemes in that country, unless there is no such regulator; and (b) ROPS established in the EEA must be established in a country or territory with which the UK has a double taxation agreement providing for the exchange of information, or a Tax Information Exchange Agreement. This takes effect from April 6, 2025.
- Requires scheme administrators (for tax purposes) of UK registered pension schemes to be UK resident from April 6, 2025.
HMRC has confirmed in its most recent pension schemes newsletter (see below) that it will write to scheme managers of QROPS in the EEA asking them to confirm that they meet these conditions. If they do not receive confirmation that they meet the new conditions by May 7, 2025, the scheme will cease to be a QROPS. The recognised overseas pension schemes notification list will be updated by May 15, 2025. Schemes should ensure that administrative processes are updated for the above changes.
Read the Act.
Neonatal care leave regulations finalised
Regulations have now been made setting out details of pensions provision required during neonatal care leave, which will be introduced on April 6, 2025. Parents will have the right to take up to 12 weeks’ leave if they have a child who receives neonatal medical care. This will be a ‘day one’ right: there will be no service requirement for an employee to be entitled to it. Whether the leave is paid depends on certain eligibility criteria.
The provisions in relation to pension rights during neonatal care leave are, broadly: accrual is required to continue (based on notional earnings) for paid periods of leave only; death in service lump sum provision continues throughout any period of leave; and member contributions are payable based on actual pay for periods of paid leave.
Schemes should consider whether their scheme rules need to be amended to allow for this new form of leave (some rules may already be flexible enough to cover new types of family leave).
Read the regulations.
PDP blog post on dashboards connection via a third party
The pensions dashboards programme (PDP) has published a blog post discussing connection to dashboards via a third party, such as an administrator or integrated service provider (ISP). It offers some reassurance in relation to connection deadlines, stating that if a scheme has appointed a connection provider working with the Money and Pensions Service (MaPS) which is unable to connect them by their ‘connect by’ date, they do not need to reconsider their route to connection; the regulators ‘will be taking a pragmatic approach to pension providers and schemes meeting their obligations and will take into account circumstances beyond their control’. It also gives some practical guidance on agreeing a connection date with a provider; completing the necessary registration with MaPS; and how to confirm that connection is active.
Read the blog post.
HMRC: Latest pension schemes newsletter
HMRC has published its latest pension schemes newsletter (no.168). The newsletter covers:
- Reminders on deadlines for migrating to the Managing pension schemes service (MPSS). Most immediately, schemes with a Pension Scheme Tax Reference (PSTR) beginning with ‘0’ must enrol and migrate before April 6, 2025. It also sets out guidance on filing pension scheme returns on the MPSS.
- The publication of extended drawdown pension tables, which apply from September 1, 2025.
- Confirmation that HMRC will write to scheme managers of QROPS in the EEA asking them to confirm that they meet the new conditions set out in the Finance Act 2025 – see above.
- A reminder that, as a result of the abolition of the lifetime allowance from April 2024, applications for fixed protection 2016, individual protection 2016, international enhancements and pension credit enhancements from previously crystallised rights must be made by April 5, 2025.
- Information on how to get involved in helping to develop a lifetime allowance protection look-up service.
Read the newsletter.
TPR pension schemes research
The Pensions Regulator (TPR) has published two reports summarising the results of its annual surveys on DB and DC trust-based occupational pension schemes.
In its press release announcing the reports, TPR focused on statistics in relation to investment in productive assets and the benefits of consolidation into larger schemes. It highlighted the high proportion of large DC schemes (57%) and DC master trusts (72%) holding productive assets, in contrast with small and micro schemes of which a significant proportion (57% and 70% respectively) did not know whether they were invested in these asset classes.
As in previous years, the reports continue to show disparities in terms of governance between larger and smaller schemes (and between DB and DC schemes), for example in relation to cyber security, awareness of TPR’s General Code, and trustee focus on the financial risks and opportunities associated with climate change.
Read TPR’s press release.
Read the report on DC schemes.
Read the report on DB schemes.
