Lost in the post: solving the case of the missing member!

Red Post Box

TPO has ruled that a pension scheme was liable to pay a full deferred pension to a claimant, despite the scheme having no record of his benefits other than a guaranteed minimum pension (GMP). This determination shows the significant weight that TPO places on HMRC’s GMP records and the inferences that can be made from those records. Continue Reading

COVID-19: Expenses of Working from Home – The Tax Rules

Working from home

The coronavirus (COVID-19) ‘lock-down’ has necessitated large swathes of the working population to perform their duties from home. As a result, working-from-home has become the ‘new normal’ for many employees in recent months.

Employers will be considering how best to assist their employees to work most efficiently and effectively from home while the lock-down endures. In doing so, keeping in mind the tax implications of their actions will be beneficial.

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The Geometry and Trigonometry of the Corporate Insolvency and Governance Act – What Is the Final Pensions Angle?

Geometric Image

If you are going round in circles trying to figure out the final shape of the new insolvency legislation, read this blog which takes a look at the impact the final amendments made to the legislation will have in the pensions sphere.

The Corporate Insolvency and Governance Act 2020 (the Act) received Royal Assent on 25 June 2020, with most provisions coming into force on 26 June 2020. In earlier blogs we covered the pensions angles of the new moratorium provisions and restructuring process that were proposed as part of the Bill, while our restructuring colleagues blogged more generally on the provisions of the Bill.

In our blogs we noted that the legislation, as originally drafted, resulted in some interesting tangents for pension schemes. Fortunately, some of the most detrimental proposals were modified at the final stage, reducing the degree of impact on pension schemes and introducing additional rights for The Pensions Regulator (TPR) and the Pension Protection Fund (PPF).

Critically, it remains the case that neither a moratorium nor a restructuring plan will be an “insolvency event” for the purposes of triggering the section 75 debt regime or a PPF assessment period. Continue Reading

COVID-19: A New Relief for EMI Option Holders

paper fortune teller

Late on Friday, 26 June 2020, with little fanfare, the Chancellor of the Exchequer tabled a new clause for inclusion in the Finance Bill 2020 (FB 2020) during its Report stage in the House of Commons. It addresses a key concern around furloughed employees who hold enterprise management incentive (EMI) options (as discussed previously on this blog), and confirms that EMI optionholders will not lose the beneficial tax status of their options as a result of being furloughed or working reduced hours because of coronavirus (COVID-19).

The new clause is very welcome as many EMI optionholders and their employers have been waiting anxiously for the government to confirm its position in this area. EMI options are widely used – according to HMRC figures, outlined in the Tax Information and Impact Note (TIIN) accompanying the new clause, in 2018-19 alone, more than 34,000 individuals were granted EMI options and approximately 12,000 companies were operating EMI schemes. However, there is a potential sting in the tail lingering as the impact of the concession on the state aid approval for the EMI scheme is not yet clear – unfortunately it is not quite time to breathe a total sigh of relief as a result.

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Flexibility Act Makes Key Change to CARES Act Payroll Tax Deferral Incentive and Other Key Changes

Following up on our prior post (here), regarding the Paycheck Protection Program loans (“PPP Loans”), President Trump signed the Paycheck Protection Program Flexibility Act of 2020 into law (the “Flexibility Act”) on June 5, 2020. The Flexibility Act relaxes and modifies certain requirements to obtain PPP Loan forgiveness. Specifically, the Flexibility Act makes five main changes:

Payroll Tax Deferral. The CARES Act allows employers to defer the employer’s portion of social security tax deposits that are due between March 27, 2020 and December 31, 2020. However, the CARES Act originally specified that this deferral option ends when an employer obtains PPP Loan forgiveness. The Flexibility Act modified the CARES Act to provide employers the option to continue deferring these taxes, regardless of whether the employer individual obtains PPP Loan forgiveness. This modification also applies to self-employed individual who are eligible to defer their self-employment taxes.

Extended Forgiveness Period. Under the CARES Act and guidance issued thereunder, only expenditures made during the eight-week period beginning on the date that the PPP Loan proceeds were dispersed are eligible for forgiveness. The Flexibility Act modified the 8-week timeframe, providing that expenditures made up to 24 weeks after dispersal are eligible for forgiveness.

PPP Loan Term. Under the CARES Act, the non-forgiven portion of a PPP loan had a two-year term. The Flexibility Act provides that PPP Loan terms shall now be five years, instead of two. Notwithstanding, PPP Loans made prior to June 5, 2020 will still have a two-year term, unless the borrower and lender mutually agree to extend the term. In addition, the Flexibility Act now provides that interest on PPP Loans shall be deferred until the amount of loan forgiveness is determined. Continue Reading

The Geometry and Trigonometry of the Corporate Insolvency and Governance Bill – What’s the Next Pensions Angle?

Geometric ImagePart Two

Yesterday, we looked at the proposed new moratorium process and the implications for pension schemes. Today we consider the new restructuring plan process.


The Corporate Insolvency and Governance Bill (the Bill) is passing through parliament at the moment. Some of the measures included in the Bill are in response to the current pandemic and will provide temporary easements for company directors from an acute economic downturn. Other measures have been under consideration for a while, and will be permanent. Continue Reading

The Geometry and Trigonometry of the Corporate Insolvency and Governance Bill – What’s the Pensions Angle?

Stacked TrianglesPart One

The Corporate Insolvency and Governance Bill (the Bill) is passing through parliament at the moment. Some of the measures included in the Bill are in response to the current pandemic and will provide temporary easements for company directors from an acute economic downturn. Other measures have been under consideration for a while, and will be permanent.

Our restructuring colleagues provide some insights into the proposed new measures on their blog page.

The pensions/insolvency nexus has long been a complex interface. The key areas where the pensions and insolvency worlds collide in statutory terms are the employer debt regime under section 75 of the Pensions Act 1995 and the trigger events for entry to the Pension Protection Fund (PPF) under the Pensions Act 2004. Many readers will be familiar with these and may initially derive some comfort from the fact that, as currently drafted, the Bill makes no changes to either regime. However, appearances can be deceiving and the proposals contained in the Bill throw up some interesting pensions angles. Today and tomorrow, we will consider two of the new permanent measures, which could affect pension schemes. We start with a look at the new “moratorium” process proposed by the Bill. Continue Reading

New Electronic Delivery Option for ERISA Retirement Plan Information

Businessman workingThere is a new electronic delivery option for retirement plan sponsors who are looking for an easier and more efficient means of providing required plan information disclosures to plan participants and beneficiaries. Retirement plan administrators can now electronically notify participants and beneficiaries that certain disclosures are available on a specified website. In addition, retirement plan administrators can more easily directly deliver the disclosures by email. Participants and beneficiaries must be able to opt out of electronic delivery and to request paper copies of disclosures without cost. Notably, the new option is not approved for delivery of health and welfare plan disclosures at this time.

Background. Current rules for electronic delivery of documents date back to 2002, and many employers have found them difficult to utilize.

The 2002 rules allow employers to use electronic delivery only for employees who (a) are “wired at work” (i.e., those who could access electronic disclosures at their job sites and who utilized their employers’ electronic information systems as an integral part of their jobs), or (b) affirmatively consent to receive documents electronically. The consent requirements are difficult because they require advance disclosure and identification of all documents and identification of necessary hardware and software requirements. In addition, the consent must be updated if hardware and software requirements change. Continue Reading

Member Communications: Radio Ga Ga or Radio Silence?

Talk Radio Computer On Air Microphone Talker

On 29 April 2020, the Pensions Regulator (TPR) published guidance on communicating to members during the Coronavirus Disease (COVID-19) outbreak. TPR is placing the burden on pension plan trustees to discourage members from making rash decisions in relation to their pension savings that could have long-term effects. It will be interesting to see how The Pensions Ombudsman interprets the extent of this duty in due course.

The guidance highlights the importance of members being able to access member services and contact the scheme if they have any queries. TPR also stresses that where there are any delays or disruptions to services, members should be kept informed. Clearly trustees need to respond to member requests – however, it does not necessarily follow that a general mailing is appropriate at this time. There is a widespread concern that communicating with members during a financial crisis may actually encourage them to think about their pension options, when they might otherwise have left their savings well alone. We urge trustees to consider the best approach for their scheme – this could be a general broadcast or radio silence.  Continue Reading

COVID-19 Relief for Employee Benefit Plan Deadlines

The U.S. Department of Labor (DOL) recently announced deadline relief for employee benefit plan notices, disclosures or document deadlines that must be furnished between March 1, 2020 and 60 days after the announced end of the COVID-19 National Emergency (“Outbreak Period”), if the employee benefit plan and responsible fiduciary act in good faith and furnish the notice, disclosure, or document as soon as administratively practicable under the circumstances.  In addition, the relief set forth a guiding principle for plan fiduciaries: plans “should make reasonable accommodations to prevent the loss of benefits or undue delay in benefit payments and should attempt to minimize the possibility of losing benefits because of a failure to comply with pre-established timeframes.”

The guidance, Disaster Relief Notice 2020-21, issued by DOL’s Employee Benefits Security Administration (“EBSA”) on April 28, 2020, was closely followed by a final regulation, issued jointly by DOL and the Internal Revenue Service (“IRS”), extending timeframes a variety of requirements under the Employee Retirement Income Security Act (“ERISA”) and the Internal Revenue Code (the “Code”).  The Final Rule, for Extension of Timeframes, was published in the Federal Register on May 4, 2020.

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