Changes to the requirements for disclosure of certain information to pension scheme members will come into effect in April 2015. Trustees will need to ensure they are ready to comply.
With the new tax year on the horizon, trustees are bracing themselves for a flurry of action once the new flexibilities kick in. Amendments to the Disclosure Regulations are set to introduce new obligations as regards information for members with flexible benefits. Trustees should be aware of these additional requirements and timescales for providing such information to ensure that they comply.
If a member of a scheme with “flexible benefits” (i.e. money purchase or cash balance benefits) on or after 6 April 2015...
- has the opportunity to transfer their flexible benefits;
- requests information on what they can do with flexible benefits or informs trustees that they have made a choice as to what to do with their flexible benefits;
- has reached (or is within 4 months of) normal minimum pension age (or meets the ill health condition); and
- has not been given such information in the previous 12 months;
... then the trustees must provide information to the member on the options available under the current scheme rules. They must also provide a statement confirming that the member may transfer to one or more pension providers who will offer different options in relation to what the member can do with their benefits, and that these will have differing features, rates, charges and tax implications. They must also provide a copy of the guidance issued by the Regulator explaining the features of such arrangements.
An estimate of the members cash equivalent transfer value needs to be included. The estimate should set out flexible rights that can currently be transferred or would be capable of being transferred if the member ceased to accrue benefits in the scheme.
A statement concerning the tax implications of flexibly accessing benefits must be included and, if appropriate, that accessing benefits before normal pension age is likely to impact the value of a member’s accrued rights.
Available guidance needs to be sign-posted. The information provided must include a statement that free and impartial guidance is available and set out the methods of accessing this along with the details for accessing. A note which states that independent advice should be considered once the pensions guidance has been accessed should also be included.
Trustees should ensure that any processes are aligned with the new requirements and should be prepared to respond to any requests received on or after 6 April within the deadlines required.
If you have any questions or would like more information, please contact one of our specialists below.This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.