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My PFS Technical news 21/08/18

Personal Finance Society news update from 3rd August to 16th August 2018.

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Taxation and Trusts

Investment planning



Numerous households benefit from stamp duty cut

(ER1, LP2, RO7)

According to statistics, thanks to the Government’s cut in stamp duty 121,500 first-time buyers have saved a total of £284 million. 

Over the next five years, it is estimated that the Government’s flagship housing policy will help over 1 million people to get onto the housing ladder.

First-time buyers buying a home for £300,000 and below pay no stamp duty at all. In addition, those who have bought properties for up to £500,000 will also have benefited from the stamp duty cut.

The Financial Secretary to the Treasury said:

“Once again, we can see that our cut to stamp duty for first-time buyers is helping to make the dream of home ownership a reality for a new generation – exactly as we intended.

In addition, we’re building more homes in the right areas, and have introduced generous schemes such as the Lifetime ISA and Help to Buy.”

Given that the government has been committed to making housing more affordable, this is definitely a step in the right direction. 

Source: National Statistics - Quarterly Stamp Duty Statistics published 31 July 2018.

OTS suggestion for taxing the platform economy

(AF1, AF2, JO3, RO3)

The OTS recently published a document exploring ideas for taxing gig economy platform workers – ie. self-employed workers who work for companies like Uber.

This review follows on from Government consultations around employment status and a Government call for evidence on the role platforms could play in ensuring tax compliance by their users.

According to the OTS statistics 800,000 more people have registered as self-employed since 2009, and self-employment now accounts for about five million workers in the UK, up to 1.3 million of which spend at least part of their time working in the platform economy.

As things stand, HMRC estimates that self-employed people account for £5 billion of the £7 billion of the uncollected ‘tax gap’ for those who self-assess for income tax. And HMRC research suggests that a quarter of those operating in the ‘sharing economy’ through online platforms are not confident about their knowledge of tax obligations. By the ‘sharing economy’ HMRC means economic activity facilitated by the internet, through digital platforms and applications (apps) that enable people or businesses to share, sell, or rent property, resources, time or skills. The sharing economy functions by matching suppliers and customers through common digital portals (platforms) that facilitate online exchanges between users and providers. These platforms host the various business functions specifically related to sharing economy activity. This paper explores the possibility of re-creating, for those individuals who are finding work through online platforms on a self-employed basis, an arrangement that looks and feels more similar to that of an employee from an administrative point of view – ie. with relatively simple tax affairs dealt with under something akin to PAYE.

Platforms, the Platform economy and Tax Simplification.  Here the OTS suggests that:

  • The Government considers the case for enabling platforms, such as taxi or delivery firms, to operate a system equivalent to PAYE for self-employed platform workers (without affecting their employment status). The OTS’s initial idea for this is that platforms could compute taxable profits, deduct tax and pay that tax on account to HMRC and then correct it all for the worker at the end of the year
  • HMRC continues to focus on the development of guidance and to ensure that this is readily available and targeted – especially at people who may unknowingly generate tax liabilities;
  • HMRC considers how best to facilitate technology developers and others to provide reassurance to the burgeoning self-employed that digital applications are fit for purpose in submitting accurate data and returns as necessary;
  • HMRC considers to what extent it can play a role, in partnership with the software industry, in facilitating the creation of an app to help self-employed people manage their tax affairs.

Interestingly, the OTS research has found that platform workers are more likely to work in professional occupations than they are to be a taxi driver or goods delivery driver. And the report acknowledges the importance of continuing to ensure that the tax system supports those engaged in every kind of work. It also points out that not all platforms make use of, or ‘employ’, the services of individuals, especially for example where the individual earns an income through the platform by ‘hiring’ out an asset, for example letting out a spare room. For such platforms there clearly isn’t an employment relationship as the platform is simply acting as an intermediary, for example, a person looking for a holiday let paying someone who has a room to let.

Whilst the OTS doesn’t appear to have come to a detailed conclusion, as yet, it does highlight some interesting statistics which may give a clue to the eventual direction of Government policy in this area.

Citing total self-employed National Insurance revenue as being expected to be £3 billion in 2016/17, the OTS makes the following comment:

 “…before allowing for the reduced benefit entitlements that remain, this means that the self-employed are paying only 37% of the national insurance that would be paid if they were employed. Differential benefit entitlements that remain may justify some difference in tax rates, but not on anything like this scale.”

Source: Office of Tax Simplification: Platforms, the Platform economy and Tax Simplification – dated July 2018.


HMRC to raise late payment interest rates

(AF1, AF2, RO3, JO3)

The Bank of England Monetary Policy Committee voted unanimously to increase the Bank of England base rate to 0.75% on 2 August 2018.  HMRC interest rates are linked to the Bank of England base rate and, as a consequence of the change, HMRC interest rates for late payment will be increased. 

These changes will come into effect on: 

  • 13 August 2018 for quarterly instalment payments;
  • 21 August 2018 for non-quarterly instalment payments.

Repayment interest rates remain unchanged.  

The current late payment interest rate applied to the main taxes and duties that HMRC currently charges has been 3% since 21 November 2017, so this is expected to rise to 3.25%. 

However, HMRC will update its information on the interest rates for late payments shortly. 

There’s no news from HMRC as to whether there will be any change in the official rate of interest, used to calculate tax on employee loans and the pre-owned assets tax charge. This rate has been 2.5% since 6 April 2017. 


  • HMRC Guidance: Beneficial loan arrangements - HMRC official rates - dated 6 April 2018;
  • HMRC News story: HMRC late payment interest rates to be revised after Bank of England rate rise – dated 2 August 2018.

OTS second review of business reliefs

(AF2, JO3)

The OTS has published a document setting out the scope of a new review of the Business Life Cycle, following on from its previous Business Life Cycle report published in April 2018.

Business Life Cycle, 2nd Report: Scoping Document
The second report will have a natural focus on the affairs of smaller businesses, particularly those with £2m turnover or less or fewer than 10 employees.

It will focus on internal events such as:

  • registering for and paying tax,
  • taking on the first employee, and
  • dealing with the tax consequences of unprofitable years.

It will also take a deeper look at practical day-to-day issues facing businesses during their start-up phase.

The review will consider the extent to which administrative complexity may contribute to errors or a failure to take reasonable care, as well as any other underlying factors which result in compliance-related practical difficulties and penalties and which contribute to the tax gap (ie. tax not being collected).

In addition, the review will build on the OTS’s previous work on smaller businesses.

Scope of the OTS review
The OTS’s review will look at direct and indirect tax issues facing unincorporated and incorporated businesses in the course of their ordinary operations, covering:

  • the accessibility and clarity of guidance and support in relation to the process of setting up a business, including the information on (linking to the OTS’s wider work on guidance), and issues arising from the interaction between an individual’s personal and business affairs;
  • how a business works out and administers its taxes, taking into account matters such as Making Tax Digital, record-keeping, filing returns and understanding allowable deductions;
  • sources of error and unnecessary complexity, and ways these could be eased or mitigated;
  • the way the tax system handles unprofitable years or shorter-term cash flow issues, for example through the loss rules and Time to Pay arrangements, and the extent to which the tax system helps businesses manage the cash flow demands of paying tax more generally;
  • the impact of taking on the businesses’ first employee and subsequent employees, with regard to payroll taxes, completing P11Ds in relation to benefits and employment allowance;
  • the impact and any distortive effect of thresholds (recognising the significance of issues of this kind that the OTS drew attention to in its 2017 VAT report);
  • issues arising in relation to relevant tax reliefs such as Research & Development (R&D) tax credits;
  • making overseas sales, or purchasing goods or services from abroad for the first time;
  • issues arising as the business develops, for example moving to new premises. 

Source: Office of Tax Simplification: Business Life Cycle, 2nd Report: Scoping Document – dated 26 July 2018.

HMRC drops IR35 case

(AF1, AF2, JO3, RO3)

HMRC has published updated guidance on higher rates of Stamp Duty Land Tax (SDLT) that apply on buying an additional residential property for £40,000 or more. It covers who has to pay, the property it applies to and claiming a refund.

Note that SDLT isn’t payable on a property bought in:

Who has to pay the higher rates of SDLT

The higher rates apply even if the buyer intends to live in the property that they are buying (and regardless of whether or not they already own a residential property).

This is because the rules don’t just apply to the buyer, but also to anyone they are married to, in a civil partnership with, or buying with.

Married couples and civil partners

  • The rules apply to both individuals as if they were buying the property together, even if they’re not.
  • If either of them individually has to pay the higher rates, he or she must pay the higher rates for the transaction as a whole (unless they are permanently separated).

Buying with someone else

  • The rules apply to each person (and their spouse or civil partner) who is buying the property.
  • If any of them individually has to pay the higher rates, he or she must pay the higher rates for the transaction as a whole.

Buying as a trustee

  • The rules may apply to the beneficiary of the trust and not to the trustee, depending on the type of trust it is.
  • If the trustee is buying on behalf of a bare / absolute trust, the beneficiary of the trust will be treated as the buyer.
  • The beneficiary will also be treated as the buyer if a trust holds property and the beneficiary is entitled to any of the following:
  • occupation of the property for life;
  • receipt of income from the property.
  • If the beneficiary is under age 18, the child’s parents are treated as the buyers (even if they are not the trustees) unless the child is covered by the Mental Capacity Act 2005 or the Mental Capacity Act [Northern Ireland] 2016.
  • The trustee will be treated as the buyer if it either:
  • is not a bare / absolute trust;
  • does not give the beneficiary a right to occupy a property for life or receive income from it.
  • If a trustee buys a property but none of the above apply (for example it’s a discretionary trust), the purchase is treated as if it were made by a company rather than an individual.

Buying as a company

  • Companies must pay the higher rates for any residential property they buy if:
  • the cost of the property is £40,000 or more;
  • the interest they buy is not subject to a lease which has more than 21 years left.
  • If the property costs more than £500,000, the 15% higher threshold SDLT rate for corporate bodies may apply instead. This can apply to companies, partnerships that include companies and collective investment schemes. HMRC provides further guidance.
  • These bodies may also need to pay the Annual Tax on Enveloped Dwellings (ATED).


  • An individual has to pay the higher rates of SDLT if their partnership already owns a residential property and he or she purchases another residential property for their partnership.

What property the higher rates of SDLT apply to

Once it’s been established who the rules apply to, it’s necessary to work out how many residential properties each of the buyers will own at the end of the day of their new purchase.

If any of the buyers will own, or part own, more than one residential property worth £40,000 or more, he or she will have to pay the higher rates on their new purchase (unless there is another reason why the higher rates do not apply).

It’s necessary to include any residential property that:

  • is owned on behalf of children under the age of 18 (parents are treated as the owners even if the property is held through a trust and they are not the trustees);
  • the buyer has an interest in as the beneficiary of a trust.

The buyer’s current home must be included if they still own it at the end of the day that he or she buys the new home.

The buyer will pay the higher rates on everything they pay, or give, for the purchase. That might include another type of payment such as:

  • goods;
  • works or services;
  • release from a debt;
  • transfer of a debt, including the value of any outstanding mortgage.

HMRC guidance provides further information on how to work out the consideration in complex situations.

When the higher rates of SDLT don’t apply
The higher rates do not apply to certain people, property and transactions. In addition, certain reliefs may apply.

People - The higher rates of SDLT don’t apply to anyone who will both:

  • use their new property as their main home;
  • have sold or given away the last main home they owned before they buy their new home (or on the same day).

Property - The higher rates of SDLT don’t apply to a property (or part of a property) if any of the following apply:

  • the property is worth less than £40,000;
  • it’s a mixture of residential and non-residential (like a shop with a flat above it);
  • it’s ‘moveable’ like a caravan, houseboat or mobile home (unless it has become a permanent fixture).

The rules also don’t apply to purchases of:

  • a leasehold interest originally granted for a period of less than seven years; or
  • a freehold or leasehold interest that is subject to a lease with more than 21 years remaining.

Transactions - If one spouse or civil partner is transferring ownership (or part ownership) of a residential property to their spouse or civil partner, the higher rates of SDLT don’t apply as long as no one else is involved in the transfer.

The higher rates of SDLT don’t apply if a person is increasing the amount of a property that they already own, provided all of the following apply:

  • they already own 25% or more;
  • the dwelling has been their only or main home for the previous 3 years;
  • (if they’re extending a lease) their lease still has 21 years or more left to run.

Multiple dwellings relief - Someone buying 6 or more properties can choose to pay either the:

  • non-residential rates of SDLT (not the higher rates);
  • higher rates using multiple dwellings relief.

HMRC guidance provides further information on what reliefs are available.

When and how to get a refund
If someone sells their previous main home after they buy their new home they must pay the higher rates of SDLT and its only if they then sell or give away their previous main home within three years of buying their new home that they can apply for a refund of the higher SDLT rate part of their Stamp Duty bill.

A repayment can be applied for within three months of the sale of the previous main residence or within 12 months of the filing date of the return, whichever is the later, by:

  • using the online form (by signing in or setting up a Government Gateway account);
  • filling in the form on-screen, printing it off and posting it to HMRC.

Links to these forms can be found here.

Note that a refund can’t be claimed if the individual or their spouse / civil partner still owns any part of their previous home

The rates of SDLT applying to residential property in England and Northern Ireland are:

On slice of value

Normal Rate

Higher Rate#

£125,000 or less§



£125,001 to £250,000§



£250,001 to £925,000§*



£925,001 to £1,500,000*



Over £1,500,000*




#Higher rate for purchase of additional residential property if value is £40,000 or more.

*15% for purchases over £500,000 by certain non-natural persons.

§For first-time buyers of property up to £500,000 there is no SDLT on the first £300,000. First-time buyer relief only applies to purchases in England and Northern Ireland.

The time limit for filing a SDLT return and paying any tax due will be reduced from 30 days to 14 days for land transactions with an effective date on or after 1 March 2019.

Source: HMRC Guidance: Higher rates of Stamp Duty Land Tax – dated 6 August 2018. 

The latest IHT statistics from HMRC show an increase in the tax take  

(AF1, RO3)

In this article we provide an overview of the complex new income and capital gains tax rules that apply to offshore trusts created by non-domiciled settlors and highlight some of the traps to watch out for.


Trust income and gains can be attributed to settlors in certain circumstances under:

  • The Settlements Code (ITTOIA 2005, Pt 5, Ch 5)
  • The Transfer of Assets Abroad rules (ITA 2007, Pt 13, Ch 2)
  • The Taxation of Chargeable Gains Act (TCGA) 1992, s86

Where the rules apply, a UK domiciled settlor will be subject to tax on income and gains as they arise; while a non-UK domiciled settlor can choose to be taxed on the remittance basis.

The Transfer of Assets Abroad rules and TCGA 1992, s87 can also create tax liabilities for UK resident beneficiaries who receive capital payments or other benefits from offshore trusts (although non-UK domiciled beneficiaries who elect for the remittance basis will only be subject to tax if the payment or benefit is remitted to the UK).

The new deemed domicile rules that apply for income and CGT purposes mean that, without protections, UK resident settlors with a foreign domicile of origin lose access to the remittance basis of taxation, and will thus be treated in the same way as UK domiciled settlors, once they have been resident in the UK for 15 out of the preceding 20 tax years (i.e. subject to tax on trust gains and foreign income on an arising basis).

The ‘protected settlement’ rules introduced in Finance (No.2) Act 2017 and Finance Act 2018 address this and ensure that settlors with a foreign domicile of origin will be treated more favourably than UK domiciled settlors (or settlors who are classed as Formerly Domiciled Residents – see ‘traps and anti-avoidance measures’ below) in relation to offshore trusts they create prior to becoming deemed UK domiciled under the new 15-year rule.

The new trust protections

The protections apply to settlors with a foreign domicile of origin both before and after deemed domiciled status is acquired under the 15 out of 20 tax years rule; and regardless of whether the trust was created before or after 6 April 2017. The criteria are simply that:

  • The trust is a non-resident trust (i.e. with offshore trustees);
  • It was created prior to the settlor becoming deemed domiciled under the 15 out of 20 tax years rule;
  • No additions are made to the settlement, directly or indirectly, by the settlor (or by another trust either established by the settlor or of which the settlor is a beneficiary) after deemed domicile status has been acquired. What constitutes an addition for these purposes is widely defined and includes adding value to property held by the trustees; as well as a non-commercial loan made from the settlor to the trustees.

For as long as the trust meets the criteria for a ‘protected settlement’, ‘protected foreign source income’ will be allowed to roll up tax free, even if the trust is settlor-interested. UK source income of a settlor-interested offshore trust will continue to be attributed to the settlor in the usual way and taxed on the arising basis.

S86, TCGA 1992 is also disapplied so that trust gains (even if they arise in respect of disposals of UK assets) are not attributed to deemed domiciled settlors.

This makes non-resident trusts very attractive for non-domiciliaries – including those currently paying the remittance basis charge – as it means that most foreign income and gains can be rolled up in such trusts without the need to claim the remittance basis and pay the remittance basis charge.

When can tax charges arise?

  • Income tax

UK resident, non-domiciled settlors will be subject to income tax by reference to benefits they receive from the trust that can be matched to foreign income. A UK resident settlor may also be taxed on income matched to benefits received by ‘close family members’ if the beneficiary is not themselves liable to tax (i.e. because he or she is either non-resident or a remittance basis user).

The term ‘close family member’ includes a spouse or civil partner, a cohabiting partner and the minor children of anyone in those categories.

Where the close family member is not themselves liable to tax on a benefit that they receive, the benefit is treated as received by the settlor. A non-domiciled, remittance basis-using settlor will therefore only be liable to tax on the benefit if it is remitted to the UK by the close family member at a time when he or she is a ‘relevant person’ in relation to the settlor.  The term ‘relevant person’ is defined more widely than ‘close family member’ and additionally includes minor grandchildren and the trustees of a settlement under which any other category of relevant person is a beneficiary. This means, for example, that if a distribution is made to a 16-year old child who does not remit the distribution to the UK until after attaining age 18, the settlor will not be taxable on the remittance (and nor will the child).

  • CGT

UK resident beneficiaries (including settlors who are beneficiaries) will continue to be taxed on trust gains to the extent that they can be matched with capital benefits they receive from the trust, with deemed domiciled settlors and beneficiaries taxed on benefits wherever paid (i.e. not on the remittance basis).

UK resident settlors will also be treated as having received capital payments made to close family members. However, one difference between this and the corresponding income tax rule is that, as far as capital gains tax is concerned, the gains are attributable to the UK resident settlor irrespective of whether or not the close family member would have otherwise been taxable on the benefit received.  For example, if a distribution which is matched against gains is made to a UK resident and domiciled spouse of the settlor, those gains will be attributed to the settlor even though the spouse would, in the absence of the close family member rule, have been taxed on the distribution.  If the settlor is a remittance basis-user, tax will only have to be paid if the distribution is received in the UK or if it is remitted to the UK.

Traps and anti-avoidance rules

  • The protections do not apply to formerly domiciled residents (broadly, settlors with a UK domicile of origin who have changed their legal domicile to a domicile of choice elsewhere but who have then returned to the UK); or to settlors who become UK domiciled under general/common law;
  • Life policy gains have never been taxed on the remittance basis and so, like UK source income, are immediately taxable on a UK resident settlor, regardless of domicile status;
  • Due to a defect in the legislation, offshore income gains that are made in respect of non-reporting funds owned by the trust, will currently be attributed to a non-UK domiciled settlor on an arising basis once they have acquired deemed domicile status. It is hoped that HMRC will amend the legislation shortly to correct this anomaly;
  • If the trustees receive overseas income which they use in the UK (for example to make a UK investment) and then subsequently confer a benefit outside the UK on a remittance basis-beneficiary, the remittance basis-beneficiary will have an immediate tax charge if the benefit is matched against the income which has been remitted to the UK by the trustees. This would be the case even though the benefit itself is received outside the UK and remains outside the UK. If, therefore, trustees think that they are likely to confer benefits on remittance basis-beneficiaries, overseas income received by them should not be used in the UK;
  • New "conduit" rules exist that ensure that if a distribution is made from the trust to somebody who is not taxable but that person then makes an onward gift to somebody resident in the UK, the ultimate recipient in the UK is treated as if they had received the distribution directly from the trustees.

The tax treatment of offshore trusts created by non-domiciled settlors is now an extremely complicated area. This article provides an overview of the rules but it is important to consider the precise facts in each case. Bespoke advice from a professional with expertise in this area will be essential.

Sources: Relevant legislation


The old lady moves at last

(AF4, FA7, LP2, RO2)

Thursday 2 August was a major day for the Bank of England: after nearly 9½ years it has raised the base rate above the 0.5% level set in the midst of the financial crisis. 

After backing off in May, with the publication of the latest Quarterly Inflation Report (QIR), the Bank of England has finally pushed the base rate up to 0.75%. The move had been widely expected, despite the uncertainties that remain around the process (sic) of Brexit.

The Old Lady’s decision follows a global pattern of the major central banks (other than Japan) gradually shifting away from the ultra-loose monetary policies introduced in the wake of the 2007/08 financial crisis. The US Federal Reserve is much further down this particular road than the UK (as the graph shows). On the other hand, the Bank of England is ahead of the European Central Bank (ECB) which last week confirmed that it expects its base rate to remain at 0.0% “through the summer of 2019”, ie. until September 2019. However, the ECB's quantitative easing (QE) programme of bond-buying will end this December.

The Bank of England rate rise announcement was accompanied by a maiden publication of the Bank’s estimate for R-star (R*). This is a variant on what used to be known as the trend real neutral interest rate. In layman’s terms that is an estimate of the long-term inflation-adjusted interest rate needed to keep inflation and growth steady when the economy is running at full capacity.

Before the financial crisis R* was 2%-3% on the Bank's estimate, implying a nominal interest rate of close to 5% based on a 2% inflation target. Not entirely coincidentally that was the average rate set by the MPC before the financial crisis. Since then, the Bank and most economists believe R* has fallen, a view supported by the spread of zero interest rates after 2008.

The Bank says that its estimate for R* for the UK is now 0%-1%, with a modal rate of 0.25%. Based on the Bank’s CPI inflation target of 2% (current inflation is 2.4%), that implies a nominal terms R* of 2%-3%. The Bank's QIR goes into great detail about R* and also considers r*, the equilibrium real interest rate, which is the R* trend rate adjusted for short-term factors. Teasingly the Bank does not say what its estimate of r* is, other than that it is lower than R*. 

Mark Carney rolled out his familiar statement "Any future increases in Bank Rate are likely to be at a gradual pace and to a limited extent" at the QIR press conference.  That fits in with the market forecasts the Bank were using – seemingly happily – which showed only another 0.50% being added over the next three years. Note quite "one and done" then, but a long wait for 1%.


Source:  Monetary Policy Committee announcement of 2 August 2018.


DWP publish Pensioner Income series data

(AF3, FA2, JO5, RO4, RO8)

The DWP have published Pensioners' incomes series: An analysis of trends in Pensioner Incomes: 1994/95 to 2016/17 . This report examines how much income pensioners get each week, and where they get that income from. It looks at how their incomes have changed over time, and variations in income between different types of pensioners.


Pensioners have seen an increase in their average weekly incomes over the past decade

The average income of all pensioners in 2016/17 was £307 per week an increase from 2006/07 when it was £260.

In 2016/17 the average income for pensioner couples was £452 per week. This was more than twice that of single pensioners, who had an average income of £214 per week.

One fifth of pensioner couples’ income was from earnings

In 2016/17, benefit income was the largest component of total gross income for pensioner couples and single pensioners. This percentage was 56 per cent for single pensioners, for pensioner couples this was 36 per cent.

Income from occupational pension was 31 per cent of total gross income for pensioner couples and 28 per cent for single pensioners.

Income from earnings made up seven per cent of total income for single pensioners. For pensioner couples, one fifth of total income was from earnings.

Pensioner couples where one is over SPa and one is under had a weekly average income from earnings of £439. Average income from earnings was £291 per week for pensioner couples where they were both over SPa.

Single men had a higher income than single women

Single male pensioners had higher average incomes than single female pensioners. In 2016/17, single men had an average weekly income of £233 and single women had an average weekly income of £206.

Over half of the total income for single women pensioners was from benefit income

Benefit income made up 61 per cent of total gross income for single women. For single men, this value was 48 per cent.

Source: DWP website

Changing mortality trends

(AF3, FA2, JO5, RO4, RO8)

The Office for National Statistics has examined recent trends in mortality and decided there has been a slowdown in the pace of increasing life expectancy.

The main points of the UK report were:

  • While there have been steady increases in life expectancy for many decades, since 2011 these increases have been slowing down.
  • Mortality rates have generally continued to improve for those aged 55 to 89 years in the UK, but the rate of improvement has slowed. A deceleration in the decline in mortality rates for circulatory diseases from 2011 has been a major factor that has driven the easing off in mortality improvements for people in this age band.
  • For those aged 90 and over, mortality rates have shown no improvement since 2011. That lack of progress, which applies to males and females and across all four UK countries, reflects increases in mortality rates for mental and behavioural disorders, such as dementia.
  • Mortality rates have worsened among those aged 15 to 54 years since 2012 in the UK.
  • At the country level, England and Wales have seen a greater slowdown in overall mortality improvements for males compared with Northern Ireland and Scotland.
  • In Wales, female mortality rates have worsened from 2011 to 2016; Northern Ireland has seen no improvement in female mortality rates from 2011 to 2016; whilst mortality rates have continued to improve in England and Scotland although at a slower rate than previously.
  • From 2011 to 2016, life expectancy at birth for females in the UK increased by 0.2 years from 82.7 to 82.9 years. This compares with an increase of 1.2 years over the previous period from 2006 to 2011. For males there has been a similar contrast in improvements; from 2011 to 2016 life expectancy at birth increased by 0.4 years from 78.8 to 79.2 years, compared with an increase of 1.6 years in the previous period from 2006 to 2011.
  • Life expectancy at age 65 has also seen a slowing in the pace of improvement. For females, 2011 to 2016 saw just a 0.1-year increase against 1.0 years in the previous period (2006 to 2011). Similarly, life expectancy at age 65 for males increased by 0.3 years from 2011 to 2016 compared with 1.1 years from 2006 to 2011.

The pension industry has been aware of the slowing pace of life expectancy improvements for some while and this has started to be reflected in DB valuations. Marginally heavier mortality assumptions, mirroring those slowing life expectancy improvements, and solid market performance help explain why JLT Employee Benefits recently reported that FTSE 100 DB schemes were in overall surplus for the first time in a decade.

Remember that ONS figures are for the entire population. Other research has shown that the greater an individual’s wealth, the higher their life expectancy. Remember, too, that the life expectancy is a midpoint number: about half the population will live longer.

Source: ONS website

Work and Pensions Committee launch pension cost inquiry

(AF3, FA2, JO5, RO4, RO8)

In the Inquiry the Work and Pensions Select Committee seeks views on whether the pensions industry provides sufficient transparency around charges, investment strategy and performance to consumers. The deadline for written submissions is 3rd September 2018.

This Inquiry follows on from previous work done by both the FCA and the Work and Pensions Select Committee on various topics including defined benefit transfers, contingent charging, pension freedoms and auto-enrolment.

The Inquiry will examine whether enough is being done to ensure individuals:

  • get value for money for their pension savings;
  • understand what they are being charged and why;
  • understand the short- and long-term impact of costs on retirement outcomes;
  • can see how their money is being invested and how their investments are performing;
  • are engaged enough to use information about costs and investments to make informed choices about their pension savings; and
  • get good-value, impartial service from financial advisers

The Committee invites evidence from all interested parties on the following questions:

  1. Do higher-cost providers deliver higher performance, or simply eat into clients’ savings?
  2. Is the Government doing enough to ensure that workplace pension savers get value for money?
  3. What is the relative importance of empowering consumers or regulating providers?
  4. How can savers be encouraged to engage with their savings?
  5. How important is investment transparency to savers?
  6. If customers are unhappy with their providers’ costs and investment performance/strategy, are there barriers to them going elsewhere?
  7. Are Independent Governance Committees effective in driving value for money?
  8. Do pension customers get value for money from financial advisers?

Source: Parliament website

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