Welcome to your weekly update from the A&O Shearman pensions team, covering all the latest legal and regulatory developments in the world of workplace pensions.
Auto-enrolment trigger and earnings band to remain unchanged
The government has carried out its annual review of the auto-enrolment earnings trigger and qualifying earnings thresholds, and has confirmed that for tax year 2025/26:
- The auto-enrolment earnings trigger will remain at GBP10,000.
- The lower and upper limits of the qualifying earnings band will remain at current levels (GBP6,240 and GBP50,270, respectively).
Read the DWP’s analysis and statement.
HMRC: Latest Pension Schemes Newsletter
HMRC has published its latest Pension Schemes Newsletter (no. 166), commenting on issues including changes to tax codes for people receiving a private pension for the first time (so that they pay the correct amount of tax), a reminder to prepare for submitting the 2024/25 pension scheme return on the Managing Pension Schemes service, and other matters.
The newsletter also includes a reminder that April 5, 2025 is the deadline for a number of applications:
- For individuals to apply for fixed protection 2016 or individual protection 2016.
- For individuals who want to apply for pension credit enhancements from previously crystallised rights.
- For overseas individuals with accrual under a registered pension scheme, or transfers from a recognised overseas pension scheme (ROPS), to apply for international enhancements.
By way of reminder on the final point, where members have been tax resident outside the UK while accruing benefits, they can apply to HMRC for a lump sum and death benefit allowance enhancement factor (and before the removal of the lifetime allowance, they could apply for an LTA enhancement factor). It is no longer possible to accrue periods of overseas service that count towards an enhancement factor – this ceased as at April 5, 2024. Members who have built up periods of overseas service prior to that date must claim any applicable enhancement factor by the earlier of the date that would have applied under the previous rules and April 5, 2025. HMRC has stated that individuals who are relying on an enhancement factor certificate dated before April 6, 2024 can continue to rely on that certificate. The separate ROPS transfer enhancement factor has similar provisions – the deadline for notifying HMRC is April 5, 2025, and only transfers prior to April 6, 2024 can be counted.
Schemes may wish to consider whether to update members about these changes (in particular, the April 2025 cut-off for new claims), and whether administrative practices need to be updated.
Read HMRC’s Pension Schemes Newsletter.
Latest GMP Increase Order published
The latest draft Guaranteed Minimum Pensions Increase Order has been published. The Order is due to come into force on April 6, 2025 and specifies 1.7% as the rate by which GMPs in payment attributable to earnings factors for the tax years 1988/89 to 1996/97 must be increased.
Read the draft GMP Increase Order.
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