Pension Scheme Administration - It could be you!
14th August 2007
Since 6 April 2006 (A-Day) many employers have
remained oblivious to new rules brought in by the
‘pensions simplification’ legislation and remain
unaware of the responsibilities they now face.
Her Majesty’s Revenue & Customs (HMRC) is urging
employers and individuals who have set up their own
pension scheme to check who their pension Scheme
Administrator is, and make sure they are aware of
their responsibilities.
If you have set up your own scheme (rather than just
joined an existing scheme) by using an insurance
company, bank or other provider, in some cases that
provider may not be the legal Scheme Administrator –
which means it could now be you.
All pension schemes, including Contracted-Out or
Contracted-In Money Purchase Schemes (COMPs or CIMPs)
and even Executive Pension schemes (EPPs), must have
at least one Scheme Administrator, and as such they
have certain legal responsibilities, for example:
- registering the pension scheme with HMRC;
- operating tax relief on contributions under
the relief at source system;
- reporting events relating to the scheme and
the Scheme Administrator to HMRC;
- making returns of information to HMRC;
- providing information to scheme members, and
others, regarding the lifetime allowance,
benefits and transfers; and
- paying certain tax charges.
Under the new simplified pensions tax regime,
introduced in April 2006, there are three new
reports and returns that the Scheme Administrator of
a registered pension scheme is responsible for
submitting to HMRC:
- the Accounting for Tax Return — The
Accounting for Tax Return is a quarterly tax
return, and only needs to be submitted where
certain tax charges have been deducted by
the scheme during that quarter;
- the Event Report — The Event Report is
an annual report that only needs to be
submitted by 31 January if certain events -
that are set out in the Registered Pension
Scheme (Provision of Information)
Regulations — have occurred during a tax
year;
- the Pension Schemes Return — The Pension
Scheme Return is an annual return that only
needs to be submitted by 31 January by
scheme administrators if they receive a
notice to file this return from HMRC.
With effect from 16 October 2007 it will be
mandatory to file the following information with
HMRC electronically:
- Applications to register a pension
scheme.
- Registered Pension Scheme Returns.
- Accounting for Tax Returns.
- A Scheme Administrator’s
Declaration.
- Event Reports.
- Notification of Winding-up a
Registered Pension Scheme.
- Notification of Termination of a
Scheme Administrator’s Appointment.
This means that if you receive a notice to file a
Registered Pension Scheme Return and do not file it
with HMRC until after 15th October 2007, you will
need to send the information to HMRC electronically.
Whilst not wanting to create any panic it is fair to
say that failure to comply with the rules and above
requirements could lead to fines and scheme
sanctions which could even lead to the scheme losing
HMRC approval.
If you're not sure who your Scheme Administrator is,
or whether or not you are now responsible, then
speak to us at Ashton Hoyle Independent Financial
Advisers and we can investigate this on your behalf.
We can also provide you with suitable advice going
forward to make the running of these schemes less of
a burden or even provide advice towards a more
suitable occupational pension scheme with less
administrative and legislative requirements, thus
allowing you more freedom to concentrate on your
business.
A more detailed look at the role of a Scheme
Administrator is outlined below
Role of a Scheme Administrator - Key facts.
All registered pension schemes must have at least
one Scheme Administrator. For most schemes, the
Scheme Administrator(s) will also be a trustee(s) of
the scheme.
The Scheme Administrator(s) is responsible for
fulfilling certain functions including:
- registering the pension scheme
with HMRC;
- operating tax relief on
contributions under the relief at
source system;
- reporting events relating to the
scheme and the Scheme Administrator
to HMRC;
- making returns of information to
HMRC;
- providing information to scheme
members, and others, regarding the
lifetime allowance, benefits and
transfers;
- paying certain tax charges.
A registered pension scheme may be deregistered if
there is no Scheme Administrator or the Scheme
Administrator does not act in accordance with the
tax rules. If a scheme is deregistered it will lose
its tax privileges and be liable to a substantial
tax penalty.
A Scheme Administrator is required to provide to
HMRC, without notice, the following if they have
anything to return:
- Annual Event Report.
- Quarterly Accounting for Tax
Return.
- Notifying they have ceased
to be a Scheme Administrator
(required within 30 days of
ceasing).
- Notifying the Pension Scheme
has wound-up (required within 3
months of the date of its
wind-up).
HMRC may serve a notice on a Scheme Administrator to
provide the following:
- Annual Registered
Pension Scheme Return.
- Annual Audited Accounts.
- Documents and other
information relating to the
scheme.
With effect from 16 October 2007 it will be
mandatory to file the following information with
HMRC electronically:
- Applications to
register a pension
scheme.
- Registered Pension
Scheme Returns.
- Accounting for Tax
Returns.
- A Scheme
Administrator’s
Declaration.
- Event Reports.
- Notification of
Winding-up a Registered
Pension Scheme.
- Notification of
Termination of a Scheme
Administrator’s
Appointment.
This means that if you receive a notice to file a
Registered Pension Scheme Return and do not file it
with HMRC until after 15th October 2007, you will
need to send the information to HMRC electronically.
For guidance on how to file information
electronically with HMRC, go to the HMRC website and
refer to the guidance provided.
The Scheme Administrator is required to provide
certain information to members and other parties
including:
- to the member
about the amount of
their benefits
taken;
- to the member on
certain tax charges
they are liable for;
- to other Scheme
Administrators in
connection with some
transfers;
- to the member’s
personal
representative where
the member has died.
The Scheme Administrator is required to keep certain
documents for six years. These relate to any:
- monies
received by or
owing to the
scheme;
- investments
or assets held
by the scheme;
- payments
made by the
scheme;
- contracts to
purchase a
lifetime annuity
in respect of a
member of the
scheme, and
- the
administration
of the scheme.
Scheme Administrator is liable to penalties if they:
- fail to
provide
information
required by
a notice or
the
legislation;
- provide
incorrect
information;
- do
something
specifically
forbidden by
the
legislation;
- fail to
keep
records.
The Scheme Administrator may also be liable to a tax
charge if the pension scheme makes an unauthorised
payment.
As mentioned previously, the Scheme Administrator
will be able to make all reports and returns to
HMRC electronically using Pension Schemes Online.
For further information on electronic filing,
together with the guidance provided in Pension
Simplification Newsletter 27 which can be found on
the
HMRC website. |
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