Earlier this year, the DWP consulted on proposals to 'consolidate, harmonise and simplify' the existing disclosure regime.
The Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013 (SI 2013/2734) have now been laid before Parliament.
They will come into force on 6 April 2014.
The draft regulations include the following changes:
- The two separate sets of regulations relating to personal pension schemes and occupational pension schemes will be repealed and replaced with a single set of regulations comprising the disclosure requirements for both occupational and personal pension schemes.
- The basic scheme information required to be provided to members on joining a scheme will be simplified. Originally, the DWP considered moving to a 'principles'-based approach. While there are still 15 pieces of 'basic scheme information' listed in Schedule 1, this prescriptive approach at least means that scheme trustees have clarity about whether they have complied with the disclosure requirements.
- Trustees or managers of defined contribution schemes who adopt a lifestyle strategy must give members information about the strategy as part of the basic scheme information on joining, and again between five and 15 years of a members' retirement.
- SMPIs: the regulations allow more flexibility in the production of Statutory Money Purchase Illustrations, so they can be tailored and made more relevant to individual circumstances.
- Electronic communication: the regulations confirm that information may be given by post, electronically, via an employer or by hand.
Flexibility was introduced into the disclosure regime from 1 December 2010 by regulations which allowed for schemes to provide information to members electronically except where members opt out.
Trustees should look at the current documents disclosed to members to identify whether any changes need to be made in advance of the regulations coming into force on 6 April 2014. Changes may be needed, particularly in relation to disclosure around lifestyling strategies.
Additionally, trustees should consider whether the increased flexibility concerning statutory money purchase illustrations can be used to improve the information being offered to members.
For more information, please contact Suzanne Burrell or your usual pensions contact.