HMT consultation on ‘Freedom and choice in pensions’ – an NAPF response

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HMT consultation on ‘Freedom and choice in pensions’ – an NAPF response

The National Association of Pension Funds (NAPF) has published its response to the HM Treasury (HMT) consultation on ‘Freedom and choice in pensions’.

Delivering the high level proposals set out in Freedom and Choice in Pensions will require a very significant effort from all those involved in delivering and managing pensions. The NAPF calls upon the Government to work with pension schemes of all kinds to ensure their successful implementation which will depend on three factors:

•              the development of appropriate and good value retirement income solutions and defaults;

•              the emergence of Guidance services that support people making retirement decisions; and

•              a coordinated and timely approach to implementation of both the budget proposals and the DWP’s proposals for governance, transparency, a charge cap and automatic transfers that minimises the risk of detriment for savers.

We call upon the Government makes the following decisions by the end of July, to ensure that Guidance is available to scheme members by April 2015:

•              The definition of the guidance guarantee in terms of what areas it will cover and who it will be available to;

•              Which organisation(s) will deliver the guidance guarantee, in particular whether this will be a centralised service with a public service obligation;

•              Who will take the lead in setting up the service and establishing its standards;

•              How the funding framework will work.

At the same time as a decision is made on what Guidance is, we also need the Government to set out a detailed delivery plan for April 2015, outlining how it envisages all those working in this market and the not for profit sector will contribute and deliver the changes necessary to ensure this policy is a success.

The question of whether members should continue to be allowed to move from defined benefit to defined contribution schemes was raised in the Government’s consultation.  The NAPF’s recommendation is the right for deferred members to transfer from defined benefit to defined contribution schemes should be retained, on the same terms, as long as individuals receive advice. 

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