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Govt proposes radical pensions disclosure simplification

London UK Parliament 480

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”.


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There are 21 comments at the moment, we would love to hear your opinion too.

  1. As soon as I see the words “pensions” and “simplification” in the same sentence I am filled with dread!

  2. Oh dear all this simplification tends to be complicated. Remember the decision tree which rapidly grew into a decision forest?

  3. Here we go. It’s Thursday and time for another piece of pension tinkering. Do you wonder people don’t save into pensions?

    What will it be next week? The annual allowance will be your average salary over the last 20 years, multiplied by your age, divided by the square root of bugger all to compute half the tax relief at basic rate.

  4. @ Simon
    Yes! and then we could not see the wood for the trees.

  5. Harry Katz, its time to retire when you’re being praised by that scourge of IFA’s, financial journalist Tony Hazell (in last weeks FA).

    Quit while you’re ahead!

    Surely, life can be more enjoyable if you can disconnect yourself from the madness that is the FSA/FCA.

    I’m getting on a bit myself and I could not imagine a worse future than sitting there trying to complete the RMAR.

    Most of the older IFA’s that I know have managed to decouple themselves from the FSA, one way or another.

    Surely you don’t need the grief anymore?

  6. I like simplification, it creates work and generates fees.

  7. Oh but surely complexities like this don’t make people look at pensions and say ‘sod that I don’t get it so I won’t bother’!!??? lol. Course they do!

    I gotta say why not get it right in the first place?? Why not plan ahead DWP & FSC/FCA rather than just running head first in to things!??

    Which also begs the question why make auto-enrolment so complex too. Many employers will end up in hot water because they don’t understand it, and yes that’s good for us as we can guide them through and charge fees for our help, but really how many employers are going to adhere to the rules and not ‘nudge’ staff to ‘opt out’. It should be simple – everyone pays X% total min X% employer, everyone certfies the scheme for X months at a time, all pay above X and below X goes in whatever type of pay it is. Anyone can put in extra within the normal pension limits, You can only opt out if you have another pension scheme that you are paying in at least X% to (or will breach your LT allowance by paying in). You have up to 3 months to join the scheme with a new employer or you are in Nest. The only other exeption where you cannot pay in is if you are terminally ill. End of. Not 4 options of paying in levels, different income types treated differently, different reporting schedules, etc. Keep things imple they work, don’t and they won’t.

    It should also be advertised PROPERLY most people think these ads on telly are just encouraging people to pay into pensions and do not realise it will effect them in the next few years – even employers!

  8. For SME’s, this is just another administrative nightmare.

    Honestly, you can easily see why some 60% of small businesses resolutely remain one-man/woman bands.

    They know it would be suicidal to employ anybody in the conventional sense.

    And that is without the coming ‘event’ of HMRC’s RT PAYE system, which I predict, will cause utter chaos.

    The Government is ultimately responsible for this and they simply do not have a clue.

  9. Heard this one before folks?

    The last simplification contained more legislation than the three previous regimes it was replacing!

  10. To be completely fair, the ‘enemy within’ is not really the Westminster politicians.

    They are only nominally in control and are just the visible surface, which takes all the flak.

    Underneath lurks the real beast, the Whitehall machine, which jealously guards its own, including the associated QUANGO’s such as the FSA/FCA.

    Until somebody is brave enough to take on and utterly defeat this beast, we English will continue to go down the proverbial plughole.

  11. So……..lifecycle communication then basically.

    Hardly ground breaking.

  12. Time for an English Spring...? 21st February 2013 at 1:52 pm

    @anonymous 12.48pm
    You are SO right. We are all having our lives, businesses, society, country RUINED by those you mention. But I’d still include ALL politicians as they do nothing to even see the problem let alone fix it. Myopic incompetents who have it far too cushy to rock the boat.

  13. @ Anonymous 11:20

    Obviously as an Anonymous contributor I have no idea who you are and rather wonder why you (with others) have to hide behind a cloak of anonymity. Be that as it may; either I am or you are losing it. What on earth have your comments to do with the topic under consideration?

    I agree with Exasperated me – at least it keeps us in business. If it were easy anyone would do it. My comment was aimed at the stupid Government – but then it is a rare thing when a Government is not stupid.

    As to your other comments. I don’t view Tony Hazell, Nic Cicutti or any of the others in that light. Sometimes criticism is justified and should be used as a learning experience. Nor in truth do I have that much of a problem with RMAR – so please don’t put your aches on me. Sure there are many issues with poor regulation, but if I wasn’t making a living or enjoying it I would pack in. Sooner or later I will have to hang up, but I’m not longing for that all. After all we are all participants in the best chess game in town.

  14. Neither scheme members nor employers can be bothered learning ANY pensions rules and why should anybody want to be interested in the various roles and responsibilities that the FSA, TPR and DWP have in framing all the complex pronouncements that keep them busy at our expense?

  15. Harry Katz @ 2.55 pm

    Calm down dear, its only a financial blog.

    The post @ 11:20 was meant to be light-hearted, sorry you took it the wrong way.

    I find your contributions are usually pretty spot-on.

  16. Would like to remind Anonymous that the regulator regulates the the whole of the UK and funnily enough there’s also English advisers in Scotland, Wales and Northern Ireland.

  17. Bob The Jock @ 5:14 pm

    You should know that Scotland has always retained its own legal system, despite the so-called Union.

    So, for example, if you are coming from England to Scotland and wish to trade there, you will soon find out that your English Limited Company is nae gud and that you will have to form a Scottish one.

    It won’t particularly interest you, but our other readers might want to pay a bit more attention to the ‘national’ news on TV from London, where an item will often be prefixed by ‘in England’ or ‘in England and Wales’.

    Better … apart.

  18. Taking a very recent example from the financial sphere. “the Government has decided to include personal financial education for schools in England from next year”.

    Not Scotland, not Wales, not NI.

    Because the remit of the Westminster ‘UK’ Government does not extend, in this case, to the territorial domains of those countries, which by the way, have their own Governments, unlike us English.

    People living in England need to wake up to the political reality of their situation.

  19. @Anon 21 Feb 3 48

    Sorry. I need to lighten up.

  20. Harry Katz @ 1:06 pm

    No, the fault is entirely mine.

    In that, on reflection, I realised it was very bad net etiquette for an anonymous person to post to somebody who is using their real name on the blogs, as you are.

    As you sensed, it can be rather disturbing to be singled out in this way.

    I am very sorry and it won’t happen again.

  21. Anon 25 Feb 9.57

    Good grief – a gent.(I presuime – not a lady). Pretty rare on these sites. Most gracious of you and appreciated.

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