Guidance

Countdown bulletin 31 - January 2018

Published 2 January 2018

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Scheme Cessation Guidelines

Our timelines for scheme cessation have not changed and remain in line with those previously outlined in Countdown Bulletin Issue 14 February 2016, with a view to completing the work by the end of December 2018.

The following guidelines still apply:

  • schemes that ceased prior to 6 April 2016 are required to notify HM Revenue and Customs (HMRC) that the scheme has ceased
  • there is no obligation to notify HMRC if the scheme ceased after 5 April 2016
  • schemes that are ceased and have an S50 certificate from the scheme cessation area but are now winding up have until December 2018 to complete the scheme cessation process
  • schemes that have a live file in scheme cessation have until December 2018 to obtain a S50 certificate
  • schemes that have a live file in scheme cessation can still register for scheme cessation shared workspace, but existing restrictions around the types of scheme that can register still apply
  • schemes that ceased before 6 April 2016 but after registering for scheme reconciliation have been switched to the scheme cessation process and should complete reconciliation activity using that route

We’re currently looking at refining our processes to get a better understanding of the timelines needed for scheme cessation. We will then be able to recommend to schemes a date by which they should submit any final queries for scheme cessation. In the meantime our recommendation is for schemes to engage with us as soon as possible so we can work through your queries.

Type 7 Query Process

We have analysed a sample of your Type 7 output and in the majority of cases, member’s accounts have been updated since the closure output was issued. We therefore suggest that once you have submitted your ‘Was In Scheme’ queries for all member types 1 to 7 and received responses, you should submit clerical queries for your remaining unresolved Type 7’s. These should be submitted as ‘Not In Scheme’ queries.

We will respond to these queries by providing the details of the employer that has provided your Scheme Contracting-out Number (SCON) on their end of year submission to HMRC. If the employer was not authorised to deduct contracted-out contributions using your SCON, you will then need to send a follow up query.

Limited Rate Premiums (LRPs) and Contribution Equivalent Premiums (CEPs) refunds

Department for Work and Pensions (DWP) Policy and HMRC are working together looking at current processes and legislation to get a workable solution for post 5 April 2016 transfers .

We will keep you updated using the Countdown Bulletin when a solution is agreed by both departments.

Business as Usual CEP’s

For members who were current at 5 April 2016 our bulk closure exercise would have closed the membership in your scheme at 5 April 2016 and issued Member Type 6 information.

If schemes now want this liability cancelled and replaced with a CEP with a post 2016 end date, then our automated scheme reconciliation solution ‘Not In Scheme CEP’ can cater for this. Please see related article later in this issue.

Not In Scheme (NIS) - CEP Automation Solution

For these queries, the automated solution requires a fully completed query template as described in the shared workspace guidance and additional automation guidance. The SCON, National Insurance Number (NI No), Surname and HMRC start/end date are mandatory.

This solution targets queries, where pension schemes request to pay a CEP to replace the liability in the scheme, when the period of service is less than 2 to 5 years depending on the termination date.

The output file will give the following information:

  • CEP amount
  • Certified amount
  • CEP status

Following the receipt of the output the pension schemes will be required to return only the relevant rows on the query response file to the HMRC dedicated inbox: paymentdetails.inbox@hmrc.gsi.gov.uk and provide a breakdown of their payment.

See fields listed below:

NI No Surname 1st Initial 2nd Initial CEP Amount
AA111111A BLACK I M or blank £20.00

The SCON, scheme name and full payment amount will need to be included in the email to the HMRC dedicated mail box. The full payment for each breakdown must be £9,999,999.99 or below, and have only one SCON per breakdown.

Member Types

In Countdown Bulletin 28 we explained:

  • if a member has reached State Pension age or died after 5 April 2016 HMRC will reconcile the date of leaving calculation and treat them as a Scheme Reconciliation Service (SRS) type 1 Early Leaver.

However we are aware that the automated solutions are not mirroring this, we are working to rectify this in our next phase.

Please read HMRC: pension schemes reconciliation services for more information.

There are also earlier editions of the National Insurance Services to Pension industry: countdown bulletins available.

Contact details

For general queries about Contracted-out Pensions please contact the helpline.

Telephone: 0300 200 3507

Please continue to deal with your usual Contracted-out Pensions contact for your day to day enquiries.

General queries about the SRS should be made to the Customer Relationship Team.

Email: CRM.schemereconciliationservice@hmrc.gsi.gov.uk

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