This blogpost reviews the “partial termination” rules for certain tax-qualified retirement plans and certain regulatory and statutory rules that have, to the benefit of employers, relaxed the partial termination rules in 2020 and 2021.
GMP Equalisation Under the Microscope – Claims for GMP Equalisation Top-ups to Historic Transfers
Will the number of transfer top-up claims be any more predicable than the weather – can we expect a blizzard or a light flurry?
Shortly after the recent High Court decision on the issue of guaranteed minimum pension (GMP) equalisation and historic transfers (the latest ruling in legal proceedings relating to a number of pension plans connected with the Lloyds Banking Group) we published a summary of the judgment and our initial reaction. Over the coming weeks we will be looking at some of the key issues raised by the decision in a series of blogs. In this first instalment we consider whether trustees of pension plans are likely to be inundated with claims for a “top-up” payment by former members who took transfers out of their pension plans, where those transfer payments would have been higher if the transferring scheme had equalised benefits between male and female members for the effect of unequal GMPs. Continue Reading
New EEOC Proposed Wellness Plans Regulations – Trouble for Participatory Wellness Plans
The Equal Employment Opportunity Commission (“EEOC”) recently proposed regulations pertaining to employer wellness programs that, as will be explained below, may concern employers that have “Participatory” wellness plans. The proposal can be found at https://www.eeoc.gov/regulations/rulemaking.[1]
Current Wellness Plan Rules under Other Laws
To understand the EEOC’s proposal, one must first take note of the other pre-existing wellness plan rules. In general, those rules are found in ERISA[2] and the Public Health Service Act,[3] and apply to employee group health plans.
Beginning in 1996 with the passage of HIPAA,[4] federal law has prohibited employer group health plans from discriminating against employees (and covered dependents) based on “health status-related factors.” Nevertheless, certain types of wellness plans are permitted.
Subsequent DOL regulations[5], with modifications made by the Affordable Care Act,[6] established rules that regulate wellness plans, categorizing them as:
- Participatory Plans,
- Activity Based Plans, and
- Outcome Based Plans
It’s (Almost) Here! The Pension Schemes Act 2021
It has been a long and tortuous process, but the pension schemes bill has finally completed its passage through parliament and we just await the formality of Royal Assent before we have the Pension Schemes Act 2021 (the Act). Well done to Pensions Minister, Guy Opperman, for (almost) achieving his goal to pass this legislation in 2020 – not an easy task when parliament has been diverted by COVID-19 and Brexit.
I will start with a few comments on the most publicised aspects of the Act, i.e. the new powers given to The Pensions Regulator (TPR) to impose criminal penalties and fines, and anticipated requirements relating to notifications about corporate sales and debt security.
Lawyers like certainty, but the Act will be less than certain in a number of key areas. Much is left to TPR’s discretion. We all want the interests of scheme members to be protected and we all want criminal activity (or sharp practice) to be curtailed, but we do not want reasonable corporate activity to be stifled merely due to the presence of a defined benefit (DB) scheme within a corporate group. Common sense must be allowed to prevail. I urge all interested parties to engage with TPR’s consultations on how the new powers and obligations should be exercised to ensure that we have a workable and balanced regime.
Here are my thoughts on some specific points. Continue Reading
Stimulus Bill Extends the Availability of Student Loan Forgiveness
Section 2206 of the CARES Act allowed an exclusion of up to $5,250 from an employee’s gross income, if an employer paid principal or interest on an employee’s “Qualified Education Loan”.
Section 2206 of the CARES Act was only designed to be in effect for calendar year 2020. However, The Consolidated Appropriations Act, 2021 (the “CAA”) extends this provision of the law through December 31, 2025.
This provision of the CAA is in Section 120 of Division EE, called “The Taxpayer Certainty and Disaster Tax Relief Act of 2020”.
It does not appear that during 2020, many employers decided to provide student loan forgiveness as an employee benefit. Given the pandemic, that is certainly understandable. However, going forward, it might be something that employers might find more attractive as a recruiting or retention tool. Thus, the following is a brief refresher on this benefit. Continue Reading
Qualified Disaster Tax Relief – Retirement Plans and Employee Retention Credits
Besides the COVID-19 pandemic, 2020 has also had its share of other disasters, including hurricanes, floods and fires.
The Consolidated Appropriations Act, 2021 (the “CAA”) has provisions that are designed to provide tax relief for individuals and employers who have been adversely affected by one of the numerous federally declared “Qualified Disasters”.
These provisions of the CAA are found in Sections 301 through 306 of Title III, of Division EE, which is called “The Taxpayer Certainty and Disaster Relief Act of 2020” (the “2020 Tax Relief Act”).
In this blogpost, we will focus on Sections 301 through 303 of the 2020 Tax Relief Act, which address (i) tax-qualified retirement plans, and (ii) employee retention tax credits for employers. Continue Reading
Stimulus Bill Extends the Availability of Employee Retention Credits
The Consolidated Appropriations Act, 2021 (the “CAA”) extends through June 30, 2021, the Employee Retention Credit provisions of Section 2301 of the CARES Act. It also favorably modifies the rules for claiming the Employee Retention Credits.
These changes are generally effective as of January 1, 2021. These provisions of the CAA are found in Sections 206 and 207 of Division EE, called “The Taxpayer Certainty and Disaster Relief Act of 2020”. Continue Reading
CMA Order: Three Ways to Avoid Starting 2021 With a Fine!
UK pension scheme trustees must submit their first compliance statement, along with a certificate, directly to the Competition and Markets Authority (CMA) by 7 January 2021.
The compliance statement relates to obligations under the CMA Order issued in June 2019, including setting strategic objectives for investment consultants, which followed the conclusion of the CMA’s investigation into the investment consultancy market. This is a new requirement, which needs to be submitted to a new regulator by a new deadline.
So far, so simple.
All Change Please, all Change! The end of the Line for LIBOR
It’s the end of the line for the London Interbank Offered Rate (LIBOR), the interest rate benchmark for many financial products since the 1980s. Sterling Overnight Index Average (SONIA), an alternative rate, will become the new benchmark of choice and pension schemes have been directed to step aboard pronto. What will the journey to SONIA look like and what stops will pension scheme trustees pass through on the way?
Where are we now?
LIBOR developed during the 1980s and originated from the need for a standard benchmark for interest rates across financial institutions. It is a measure of the average rate at which banks are willing to borrow wholesale unsecured funds and is calculated by using banks’ submissions of their inter-bank borrowing rates. Calculated on a daily basis and in five currencies, LIBOR is widely used as an interest rate benchmark and written in to an array of legal contracts and financial products. Continue Reading
IRS Guidance on the Payroll Tax Executive Order (US)
On August 8, 2020, President Trump issued an Executive Order titled “Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster” (the “Order”). The Order directs the Secretary of the Treasury to permit deferral of employee Old Age, Survivors and Disability Insurance (“OASDI”) taxes for payroll dates on and after September 1, 2020 through December 31, 2020.
The Order was the subject of a prior Blogpost on August 11, 2020.[1] That Post reviewed many legal and practical concerns associated with attempting to implement the Order. It also emphasized that the Secretary of Treasury was to issue guidance on how to implement the Order.
On August 28, 2020, the IRS issued Notice 2020-65 to provide long awaited guidance in relation to the Order. This Post summarizes the guidance in Notice 2020-65, and remaining legal and practical issues pertaining to the Order. Continue Reading
