The Department for Work and Pensions (DWP) has published its final proposals around the disclosure of information for workplace and personal pension schemes.
The occupational and personal pension schemes (disclosure of information) regulations 2013 report presents an analysis of the responses to the DWP’s consultation, which was open between February and April 2013, its considerations, the evidence it has taken into account and its final proposals.
The consultation proposed that the existing Occupational pension schemes (disclosure of information) regulations and Personal pension schemes (disclosure of information) regulations should be repealed and replaced with one statutory instrument containing the disclosure requirements for occupational and personal schemes.
The DWP’s final proposals include:
- Simplifying the structure and language of the regulations.
- Updating references and aligning some of the rules where these are currently different between scheme types.
- Simplifying some of the basic information that occupational schemes are required to disclose to prospective and new members, making some information, currently given as a matter of course, available on request.
- Making a number of changes in relation to benefit statements and statutory money-purchase illustrations (SMPI) with the aim of making these more flexible and relevant to members’ needs. This included a question about the appropriate timing of the first SMPI to take account of the introduction of auto-enrolment.
- Clarifying the rules about giving information electronically either by email or by providing the information on a website, and amend other private pension legislation to make clear that all information may be given by electronic means and where this is done, that the same rules apply to all types of information.
In addition to the above changes to the existing regime, the consultation proposed to introduce an additional requirement for schemes to provide information about lifestyling, where schemes adopt this strategy.
The consultation proposed that information about a scheme’s strategy of investing members’ funds in lower-risk investments in the years approaching retirement should be given as part of the basic information to new members and again in the latter years of the pensions lifecycle, before decisions to move funds to such lower-risk investments are made.
It is intended that the regulations will be put before Parliament as soon as possible and come into force from 6 April 2014.
Tom McPhail, head of pensions research at Hargreaves Lansdown, said: “The quality of the communication between the pension scheme and members is absolutely vital to the success of auto-enrolment in a money-purchase world.
“If members aren’t engaged with their retirement savings, then they don’t stand a chance of hitting their retirement target. Simply closing your eyes and ‘using the force’ doesn’t work with pensions.
“To its credit, the DWP has recognised that in order to get members engaged, it is important that schemes have the right rules in place around how they communicate with members.”