Responding today to the Government’s consultation, Occupational and Personal Pension Schemes and the Pension Protection Fund (Miscellaneous Amendments) Regulations 2016 consultation and the call for evidence on the valuation of pensions with a Guaranteed Annuity Rate, the Pensions and Lifetime Savings Association argues that the proposed regulations on retirement risk warnings for trust-based pension schemes should take their lead from the approach set out by the Financial Conduct Authority (FCA), which regulates contract-based pension schemes.
The Association suggests that trust-based schemes should issue risk warnings only when the member applies to take income from the scheme, and that these risk warnings should relate to the option the member is choosing.
Tim Gosling, Policy Lead for Defined Contribution at the Pensions and Lifetime Savings Association, commented:
“Whilst in general the regulatory changes proposed by the consultation are sensible and relatively straightforward, the approach to the risk warnings should change to bring the warnings closer into line with practice in the contract-based sector.
“Keep in mind that the member will have already received information describing all of the various ways they can take pension income. The saver does not need that same information twice in a short period of time − even if it’s phrased differently. Instead, we believe the approach to risk warnings for trust-based pension schemes should require the receiving scheme to issue risk warnings about the way the member intends to take their benefits before they take a decision.
“Our proposed approach avoids savers receiving large quantities of identical information, and should enable savers to make a more informed choice while accessing their flexible benefits in a convenient way.”
Read our full response to the Occupational and Personal Pension Schemes and the Pension Protection Fund (Miscellaneous Amendments) Regulations 2016 consultation and the call for evidence on the valuation of pensions with a Guaranteed Annuity Rate.