Pension scheme administrators and consultants expressed irritation in January after draft proposals published in May 2008 weren’t followed up by final regulations before the end of the year.
Now HM Revenue & Customs (HMRC) has confirmed that the regulations have been delayed until the third quarter of 2009, despite being mentioned in the last Budget.
Neil Bowden, partner at Allen & Overy, said the delay concerned a number of his clients. “Trustees need to know the decisions they’re making are the right ones. We have clients having to make decisions every day about how to deal with real issues. For example, should trustees be trying to get excess payments back from grieving widows or can they let them go?”
In the meantime, administrators could suffer from the ongoing lack of flexibility on trivial commutation; the risk of excess tax liability where there should not be; questions about when to recover overpayments; and problems over inaccurate event reports.
Bowden added that scheme administrators were beginning to feel annoyed at being left in the dark when it came to how they should be reporting unauthorised payments this year.
“They didn’t know whether payments were about to be authorised retrospectively. HMRC issued a letter just two days before the January 31 deadline telling administrators to operate on the basis of the draft regulations until they hear otherwise,” he said.
In response, HMRC stated: “These regulations have been the subject of extensive consultation. Changes to the draft regulations responding to the representations made during the consultation have resulted in a slight delay, but it is hoped to lay them in the near future.”
