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29 November 2010

Electronic information for members

From 1 December 2010 pension schemes can send members information about their benefits by email and can simplify illustrations of DC benefits.  But they need not take up either option if they do not want to.  

E-communication

Trustees can set email and website postings as the default method of communication for the bulk of the information they have to give members and other beneficiaries.  But certain conditions must be met:

  • information must be in a form that recipients can access and can either print or store, and the needs of disabled persons must be taken into account,
  • before emailing information to them, the trustees must tell anyone who is already a member or beneficiary on 1 December (and has not previously received benefit information electronically) of their proposal to use electronic means in future.  This notification has to go by post,
  • every recipient has a right to opt out of e-communication and
  • recipients have to be told when material is posted on a website.  Typical candidates for posting are the larger documents that trustees have to make available e.g. deeds and rules, and the annual report.

In the past most information had to be sent by post.

In future members and other beneficiaries can continue to communicate with the trustees by post if they want to.

Statutory money purchase illustrations (SMPIs)

The simplifications to a member's annual illustration of their DC benefits (e.g. AVCs) are minor.  

The following statements are no longer required:

  • that the illustration is only one consideration to take into account in making decisions about benefits and
  • that it is required by law and has been prepared using prescribed assumptions.

In addition, these statements that are required today can be posted on the website instead of accompanying the illustration:

  • that assumptions have been made about the underlying investments and their performance which may not borne out,
  • that the eventual pension will depend on variables like investment performance and annuity rates and

about certain specific assumptions behind the illustration.

Address unknown

In the past, information did not have to be sent to deferred or pension credit members if post to their last known address was returned.  In future this applies to all members and beneficiaries and also where correspondence to the last known email address is failing to get through.

Incomplete

The option of e-communication only applies to information that has to be provided under the main set of regulations on disclosure.  It does not apply to information requirements in other sets of regulations like those on the preservation of benefits for early leavers and transfer values.  The Department for Work and Pensions says it will look at extending the electronic option to these other areas.    

As you like

Schemes can ignore the amended regulations and continue with their current procedures if they prefer.  The alterations deliberately leave this option open.    

These few changes are all that is left after a plan for a radical simplification of the disclosure requirements was abandoned.

If you would like more information, please get in touch with your regular contact in our pensions team or with Marcus Hellyer on 0117 902 7789 or marcus.hellyer@burges-salmon.com

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