Free And Extended COBRA Coverage Under The American Rescue Plan Act Of 2021: Update

By Gregory Viviani and Stacey Grundman on April 12, 2021 Posted in Benefits, Employee benefits

Section 9501 of the American Rescue Plan Act of 2021 (the “ARPA”)[1] requires certain employers to offer free COBRA coverage to certain individuals between April 1, 2021 and September 30, 2021. The ARPA provides tax credits to employers to offset the cost of the COBRA coverage. The right to free COBRA coverage extends to some individuals whose right to COBRA coverage previously ended.

The original version of this blogpost, written shortly after passage of the ARPA, reviewed eligibility free coverage and extended coverage, how the tax credits work, and potential issues pertaining to insurance coverages. On April 7, 2021, the Department of Labor (the “DOL”) issued guidance on the law in the form of “Frequently Asked Questions” and various model notices that can be used in connection with the law.[2] This post reflects the DOL’s recent guidance.

GMP Equalisation Under the Microscope – Proactivity Under the Lens

By David Griffiths on April 9, 2021 Posted in UK Pensions

Human-Resources

GMP Equalisation and Underpaid Cash Equivalent Transfer Values – Will Trustees Have to Trace and Compensate Members Proactively, or Can Trustees Wait for Claims?

Shortly after the High Court decision commonly referred to as “Lloyds 3”, which considered the issue of guaranteed minimum pension (GMP) equalisation and the extent to which past transfers out should be revisited, we published a summary of the decision and our initial reaction. We continue to look at some of the key issues raised by the Lloyds 3 decision in a series of blogs. In this blog, we will consider the question of whether, and to what extent, trustees have to be “proactive” in seeking, finding and topping up cash equivalent transfer values that were underpaid as a result of a failure to equalise for the effect of unequal GMPs.

TPR Tightens the Governance Net in its New Code of Practice

By Squire Patton Boggs on April 6, 2021 Posted in UK Pensions

If you were under the impression that the single code of practice would be a consolidation of existing codes, then the content of this blog will come as a surprise!

The Pensions Regulator (TPR) has published a consultation on the first phase of replacing the existing Codes of Practice with a single, online Code of Practice (the New Code). The first phase involves converting 10 of the existing Codes of Practice into 51 shorter, topic-based modules. The remaining five Codes of Practice (in relation to notifiable events, funding defined benefits, modification of subsisting rights, master trusts and the material detriment test) are expected to be added to the New Code in due course. TPR also plans to review its guidance in line with the New Code, starting later in 2021.

TPR decided to introduce the New Code in order to make its material easier to use and understand. The draft New Code also incorporates the new governance requirements set out in the Occupational Pension Schemes (Governance) (Amendment) Regulations 2018 (the Governance Regulations). The New Code is not a straight consolidation of existing Codes of Practice – updates have been made throughout to tighten up on governance requirements and to clarify TPR’s expectations on how standards should be met and how compliance should be evidenced. It is not safe to assume that an existing policy, practice or procedure would meet the standards expected in the New Code.

This blog highlights some of the key points to note from the New Code.

American Rescue Plan Tax Credits for Employers Who Voluntarily Provide FFCRA Leave – Supplement

By Gregory Viviani and Laura Lawless on March 26, 2021 Posted in Uncategorized

This is a Supplement to our post on March 24, 2021 regarding Section 9641 of the American Rescue Plan Act of 2021 (the “ARPA”). This Supplement addresses state and local governmental employers.

Section 9641 of the Rescue Plan makes available tax credits to offset the costs borne by certain employers who voluntarily provide emergency paid sick leave and emergency paid family leave to employees for certain types of covered absences occasioned by the pandemic, from April 1, 2021 through September 30, 2021.

Prior to April 1, 2021, no tax credits were provided for state and local government employers who were either required to provide leave under the Families First Coronavirus Response Act (FFCRA) during 2020, or did so voluntarily from January 1, 2021 through March 31, 2021.

However, Section 9641 of the ARPA does appear to extend the availability of tax credits to state and local governmental employers who voluntarily provide FFCRA leave from April 1, 2021 through September 30, 2021.

It appears that a state or local governmental employer must meet all of the relevant provisions of the FFCRA, as amended by the ARPA, in order to qualify for the credits, including the “nondiscrimination” rules contained in Internal Revenue Code Sections 3131(j) and 3132(j). Please see our March 24, 2021 post for additional details.

As of this date, the IRS has not updated Questions and Answers on its web site pertaining to FFCRA credits to reflect the passage of the ARPA. Thus, we have not seen an official acknowledgement of the foregoing. Thus, state and local governmental employers should stay tuned for further guidance from the IRS.

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American Rescue Plan Tax Credits for Employers Who Voluntarily Provide Paid Sick Leave and Paid Family and Medical Leave

By Gregory Viviani and Laura Lawless on March 25, 2021 Posted in Tax, US

On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021 (the “Rescue Plan”).[1] This post reviews Section 9641 of the Rescue Plan, which makes available tax credits to certain employers who voluntarily provide paid time sick leave and family and medical act leave to employees for absences occasioned by the pandemic, from April 1, 2021 through September 30, 2021.

Section 9641 of the Rescue Plan is based on the paid sick leave and paid family and medical leave provisions that were effective April 1, 2020 through December 31, 2020, under the Families First Coronavirus Response Act (“FFCRA”).[2] Although the mandatory paid leave provisions of the FFCRA were not extended past December 31, 2020, the tax credits available under Section 9641 of the Rescue Plan are based on the framework of the FFCRA, with certain modifications.

This post will first review the FFCRA, and then explain how the Rescue Plan’s tax credits work.

ARPA Expands Section 162(m) Covered Employee Group

By Joe Yonadi and Carl Draucker on March 22, 2021 Posted in Tax

The American Rescue Plan Act of 2021 (“ARPA”)[1] makes a small but significant change for publicly held corporations subject to the compensation deduction limitations under Internal Revenue Code Section 162(m).

In general, Code Section 162(m) limits deductions for compensation in excess of $1 million for “covered employees”. Continue Reading

The Saver is at the Heart of TPR’s 15-year Strategy

By Anna Diaz-Sanchez on March 19, 2021 Posted in UK Pensions

Three_Generations Taking a look across the generations, The Pensions Regulator (TPR) has set out its blueprint for the future of pensions regulation in a 15-year strategy aimed at protecting savers in the short and long term. The strategy focuses on TPR’s commitment to evolve from a scheme-based view to one that puts the saver at the heart of all that it does.

Understanding Pension Savers

In order to move the focus to pension savers, TPR has adopted a new analysis based on different groups of savers by generation. TPR has recognised that each group is likely to have a different level of reliance on different pension systems and, therefore, face distinct challenges that will each require a tailored approach.

Pension Schemes Act 2021 Under the Microscope – TPR Consultation on the new Criminal Sanction Powers

By Bethany Darragh on March 18, 2021 Posted in UK Pensions

Will The Pensions Regulator (TPR) take a similar approach to the Financial Conduct Authority (FCA) when initiating criminal proceedings?

Background

The long-awaited Pension Schemes Act 2021 (the Act) received Royal Assent on 11 February 2021. Within the Act, new offences have been inserted into the Pensions Act 2004 (PA04) which include Section 58A (avoidance of employer debt) and Section 58B (conduct risking accrued scheme benefits), both carrying a risk of imprisonment for up to seven years.

On 11 March 2021, TPR published a draft policy outlining its approach on how it will use its new criminal powers to investigate and prosecute those who avoid employer debts or put member benefits at risk.

The approach will be subject to the consultation it has also published and the final policy will be issued later in the year. The criminal sanctions will not come into force until the autumn of 2021 and are not expected to have retrospective effect, although TPR has said that evidence pre-dating the implementation date may be taken into account, as regards the intent of the parties.

This blog covers some of the practical points that are worthy of note.

Free And Extended COBRA Coverage Under The American Rescue Plan Act OF 2021

By Matthew Secrist and Gregory Viviani on March 16, 2021 Posted in Benefits, Employee benefits, US

Section 9501 of the American Rescue Plan Act of 2021 (the “ARPA”)[1] requires employers to extend offers of free COBRA coverage to certain individuals for the period from April 1, 2021 through September 30, 2021. The ARPA then provides tax credits as means of offsetting the costs of the free COBRA coverage. The law also requires employers to extend offers of COBRA coverage to other individuals whose right to COBRA coverage previously ended.

GMP Equalisation Under the Microscope – Zooming in on Outstanding Top-ups

By Kate Bailey on February 25, 2021 Posted in UK Pensions

Human-Resources Should receiving scheme trustees chase CETV top-ups?

Background

It is currently generally accepted that trustees of defined benefit (DB) pension schemes are obliged to equalise benefits between male and female members to correct inequalities in guaranteed minimum pensions (GMPs), and that this extends to transferred-in benefits. Following the most recent Lloyds judgment, we now also know that transferring scheme trustees have an obligation to proactively consider topping-up individual statutory transfers (CETVs) where the transfer was less than it ought to have been as GMP equalisation benefit adjustments were not taken into account when the transfer was calculated. As a trustee of a DB scheme you may well be considering how to approach paying CETV top-ups. But the recent Lloyds judgment also presents a potential opportunity to turn around and look the other way, at CETVs received into your scheme. Continue Reading