Report: Quarter 2 2018 – Legislative Update

This legislative update aims to help employers make the most of changes to pensions law and regulation. Scottish Widow’s update focuses on tax issues, pension transfers, pension freedoms and non-advised drawdown concerns.

Key findings

• The Financial Conduct Authority (FCA) has published new rules on pension transfer advice. The rules state that advice should be presented as a personal recommendation taking account of a client’s individual circumstances.
• Scottish taxpayers who receive pension tax relief through the net pay basis are unaffected by the new Scottish rates of Income Tax. However, for tax year 2018/19, pension tax relief provided via the relief at source basis will continue to be applied at the basic rate of 20 per cent by pension providers.
• HMRC’s statistics Flexible Payments from Pensions: April 2018 reveal that a record number of payments were made during the first quarter of 2018 compared to previous quarters: a total of 500,000 payments were made to 222,000 individuals with a total value of £1.697 billion.
• The FCA found that around a third of individuals are entering drawdown without consulting with an adviser. It is also concerned that individuals are not engaging with the information and tools pension providers are offering to help them make informed decisions.