"From next April only active sponsoring employer companies will be able to register a pension scheme and benefit from tax relief, choking off an avenue commonly used by scammers."
HMRC has been given new powers to refuse to register and to de-register pension schemes.
The new powers can be used in cases where master trusts don’t have authorisation from the Pensions Regulator under their new authorisation and supervision regime, and for pension schemes with a dormant company as a sponsoring employer, commonly used by scammers.
Legislation will be introduced in the Winter Finance Bill 2017, with new rules effective from 6 April 2018.
However Aegon has warned that extending this to master trusts may be premature as the Pension Regulator’s new authorisation and supervisory regime isn’t expected to be in place until October 2018.
Kate Smith, Head of Pensions, Aegon, commented: “The extension to HMRC’s powers is a welcome step towards combatting pension scams, and will give greater protection to savers. From next April only active sponsoring employer companies will be able to register a pension scheme and benefit from tax relief, choking off an avenue commonly used by scammers. HMRC now needs to carry out a thorough audit of its pension scheme database and weed out any illegitimate schemes, so they can be deregistered on 6 April 2018 with immediate effect.
“From next April, HMRC’s new powers will also be extended to master trusts which don’t comply with the Pension Regulators’ new authorisation and supervision regime. The timing however appears out of sync, as the Pensions Regulator’s new regime isn’t expected to be in place until October 2018 at the earliest. It will be simply impossible for master trusts to comply with HMRC’s new rules until the authorisation and supervisory regime is up and running. The Government will need a rethink before it publishes the Winter Finance Bill if it’s to ensure that all the rules work in practice.”