The Government is consulting on a new statutory requirement for schemes to send members with money purchase benefits a risk warning which explains the various potential benefit options (ie transfer value, annuity purchase, lump sum or drawdown), whether those options are available under the scheme, and factors in respect of those options which could adversely affect retirement income. The Government says it expects the risk warnings to be provided alongside current communications, after the "wake up pack" but before the member accesses his benefits. The warnings will also need to be accompanied by a statement setting out the member's options under the scheme and flagging the importance of the risk warnings and of accessing pensions guidance or advice.
Other points covered by the consultation include: applying to ex-spouses' rights the existing independent advice requirements before making a defined benefit to money purchase transfer; a call for evidence on how benefits with a guaranteed annuity rate should be valued when determining whether their value is over £30,000; and amendments to ensure that schemes are still eligible for the PPF where appropriate notwithstanding that the nature of the employer makes it legally incapable of undergoing a triggering insolvency event.
The consultation closes on 11 January 2016.