Clearer and simpler rules about the information schemes must give to members come into effect on 6 April 2014.
The new regulations cover occupational and personal pension schemes and will replace the existing separate sets.
Policy on disclosure is unchanged but there are adjustments in the detail. Some requirements are simplified and some harmonised for different types of scheme.
The new regulations:
- align timetables that today differ between types of scheme for providing certain information
- clarify how information can be delivered, including electronic methods
- simplify the 'basic information' to be given to new and prospective members so that some of the more elaborate items need only be given on request
- simplify the requirements for DB benefit statements, including allowing trustees to choose the most appropriate retirement date (to recognise flexible retirement)
- allow DC schemes to use more personalised assumptions in SMPIs and to include lump sums
- for the first time, require DC schemes to tell members if they intend to use “lifestyling” i.e. an investment strategy that gradually reduces risk as members approach retirement
- drop the requirement that guidance on annuities for those approaching retirement needs to be approved by the Secretary of State (but approval by the Regulator will still be needed)
- in relation to personal pension schemes, remove duplication with FCA rules on disclosure.
There is some consolidation but there will still be stipulations about disclosure in a number of other sets of regulations eg in relation to early leavers.
The DWP issued a public consultation about changing the disclosure requirements in February. In July it published its response to the views it had received and set out its position.
One aspiration it expressed was that, save where policy dictates otherwise, schemes should be able to choose between adopting the new requirements and continuing with their existing practices. It will take a close look at the detail to see how far this has been realised.
We hope the DWP will update the table it issued with the consultation draft of the regulations mapping the old requirements to the new ones.
The regulations are available here.
If you would like more information please contact Richard Knight.