New LTA rules need six months before going live said ACA
ACA said in its reply to the Revenue’s consultation, that October should be a deadline it focuses on if the delivery of the new policy is to be practical.
It is essential that key policy decisions have been taken, core draft legislation released to reflect those decisions that include any new legislation and revision, with a clear window for further consultation to ensure the measures are fit for purpose.
If HMRC misses this deadline, members could be forced to make decisions ahead of properly knowing all relevant facts, said the ACA response.
DC members must receive information at least four months before their retirement date, though many schemes aim to send this out six months in advance.
Snags and unintended consequences
The statutory four months indicates how long the government thinks a member requires to properly consider their options. This is particularly relevant when there is a change to the options available.
Processes, letters and Systems all take time to be updated, said the ACA, and some of these take months to effect. This will impose additional costs from manual workarounds and queries from members where information is corrected by addenda.
Any manual calculations must be undertaken by skilled staff, which is likely to raise costs further.
Steven Taylor, chair of the ACA, said: “The speed of the consultation, the fact that comments will have been gathered while some elements are likely to change or may not have yet been published, means that the industry will not have been able to consider the whole picture – let alone our usual measured line by line checks – so errors are likely to slip through.
“We expect that some aspects of the legislation will not operate as intended – but that this will only be discovered when the measures are put into practice.
“And changes might feed through by default in unintended ways to change the operation of scheme rules. At A-day this was carefully controlled by temporary regulations under tax law and Pensions Act.”
ACA said it understands that HMRC seeks to achieve the changes very quickly and asked whether a mid-tax year date such as 1 October 2024 would be more practical to allow more time for proper steps including extra stages of consultation.
