Frustration is mounting among pension providers at the
government's delayed release of regulations for the simplified
pensions tax regime that comes in on 6 April - known as
'A-Day'.
The uncertainty is forcing some firms to put other technology
projects on hold, and it is pushing the industry as a whole to
establish contingency plans to ensure adequate IT resourcing for
dealing with new regulations as and when they arrive.
HM Revenue and Customs and the Department for Work and Pensions
are both late in delivering details of 20 regulations, even though
A-Day has already been put back 12 months from its original start
date of 6 April 2005.
The pensions industry is also having to accommodate the delayed
launch of HMRC's online reporting service for pension scheme
administrators, which the Revenue's IT partner Capgemini has fallen
behind on.
The government announced last November that the service would be
delayed until at least October this year, creating a headache for
insurers and other scheme administrators whose systems are ready,
but now have to make interim filing arrangements.
Alongside the outstanding regulations, insurers are also
perturbed by the chancellor Gordon Brown's decision to block the
tax-free recycling of funds from one pension fund into another.
The finer details of the plan were only released in February
this year, three months after Brown announced his intentions, and
the Association of British Insurers has called them "complicated
and unworkable" with A-Day fast approaching.
The association said that, in principle, the changes to the
pension tax regime were very welcome, but it warned, "The
government, through the appropriate departments and agencies, needs
to get information to insurers in a timely fashion to adapt their
systems.
"In the case of the some key pieces of regulation, this clearly
has not happened - and there is now little more than two weeks to
go."
The association said its members would all have contingency
plans in place, so the likelihood of major problems arising was
slim.
But it said that being forced to devise interim solutions to
cover the information gap was inevitably "labour-intensive and
costly", both in financial terms and in terms of the cost to a
business.
"It is not something we are happy about, but we are forced to
work with the system we are given," it said.
What's going on with pensions?
With the pensions tax regime about to undergo radical change,
the pensions industry is already engaged with the government over
the future shape of the industry.
The Turner Report, issued by the Pensions Commission last year,
set out proposals for a new national pension scheme, and initially
envisaged this as a public sector operation.
But the Association of British Insurers (ABI) and the National
Association of Pension Funds (NAPF) have since put forward plans
for how the private sector could run the scheme, leaning heavily on
their existing technology.
However, Adair Turner, the man behind the Turner Report, told
the ABI and NAPF in a debate earlier this month that their proposed
alternative to his vision for the National Pensions Saving Scheme
were too risky for consumers, despite the possible savings from
using existing IT systems.
Turner said the "carousel" system proposed by the ABI, where
savers are allocated a life office fund in rotation where they have
not made a choice, could lead to mis-selling.
Read article:
The IT challenges caused by the government's
foot-dragging