Govt proposes radical pensions disclosure simplification
The Government has proposed a series of simplifications to pensions disclosure rules as policymakers consider moving towards a more “principles-based” approach.
The Department for Work and Pensions has published a consultation detailing plans to remove duplications in disclosure requirements affecting occupational, personal and stakeholder schemes and harmonise the different sets of rules where possible.
In particular, officials have moved to iron out any repetition and “discrepancies” between FSA and DWP rules.
Proposed changes include:
removing regulations requiring personal pension schemes to provide basic scheme information where these duplicate FSA conduct of business rules;
simplifying the terminology used in DWP regulations;
requiring personal pension schemes and defined-contribution schemes to inform members that their funds are being invested on a “lifestyling” basis;
removing the requirement for schemes to assume a member will take an annually increasing annuity when producing illustrations. The DWP says this will allow schemes to provide projections which relate to the choices a member actually makes at the point of retirement;
updating disclosure requirements to clarify how websites and email can be used to disclose information to members.
The Government wants to introduce these simplified disclosure standards in October this year.
In addition, the Government is considering moving to a more “principles-based” approach to pensions disclosure. Any such change would be consulted on separately.
If this happened, strict rules around how pension schemes provide information to members could be scrapped and replaced with a single high level principle.
The DWP suggests this principle could be that “members should be given sufficient information that allows them to understand the benefits to which they will be entitled and any other relevant information that will enable each member to make decisions in his or her best interests”.