The DWP has published a consultation on draft regulations intended to harmonise, simplify and consolidate the disclosure regulations for occupational and personal pension schemes from October 2013. The stakeholder pensions regulations are to be separately amended to reflect the changes referred to below on electronic disclosure and SMPIs.

Click here for the consultation document.

Consultation closes on 14 April 2013. The key proposals are as follows.

Removal of some personal pension scheme information requirements

Requirements which duplicate those in the FSA Conduct of Business rules will be deleted, e.g. requirements to provide information on the constitution of the scheme and basic scheme information. Requirements which will remain in the disclosure regulations include:

  • annual benefit statements, including SMPIs (see below);
  • pre-retirement information;
  • benefits on the death of a member or beneficiary; and
  • information when the scheme has begun wind up.

Basic information about the scheme: occupational schemes

Changes include:

  • removal of the requirement to give information on AVCs, now that there is no longer a requirement to offer an AVC facility;
  • (finally) correcting the outdated requirement to disclose the tax-approval status of the scheme, replacing it with a reference to a registered scheme;
  • simplifying the rules on when schemes must give information about material alterations to basic scheme information: it will instead have to be given as soon as possible after the decision to make the change has been made; and
  • simplifying the information on transfers out to new members.

Lifestyling: new requirement

Stakeholder schemes are already required to inform members about lifestyling. Occupational and personal DC schemes which use lifestyling will have to:

  • notify members and prospective members, as part of the basic scheme information, that a lifestyling strategy will be applied to their accrued rights; and
  • notify members again between four months and two years before lifestyling is be adopted in relation to their funds.

Most of the proposals in the consultation document are relaxations, which schemes can choose to take advantage of if they wish; however, this new requirement for disclosure on lifestyling is mandatory. The information can be provided along with other information, e.g. with an annual statement.

Benefit statements

DB schemes

Simplifications include allowing schemes to use the most appropriate retirement date when preparing the statement rather than a prescribed pension age; and allowing schemes longer to process the statement.

DC schemes: statutory money purchase illustrations (SMPIs)

Schemes are to have greater flexibility to choose the calculation assumptions for SMPIs, enabling them to provide more tailor-made statements for members. The key change is the removal of the requirement to assume the purchase of an annually increased annuity and a dependant's pension, as evidence shows that most members do not select these options. Schemes which change the SMPI assumptions must inform the member of the change and its effect on the illustration.

Other SMPI changes include:

  • reflecting in the SMPI for a deferred member any regular voluntary contributions which will continue to be made until retirement; and
  • changing the requirement for the first SMPI to be provided within 12 months (which does not sit very well with automatic enrolment, especially for schemes operating postponement) – the DWP asks for suggestions as to what period should be used instead.

Electronic communications

The electronic disclosure requirements introduced in December 2010 have been clarified. This includes the replacement of references to disclosures “in writing”, as that expression would include email but not making information available on a website, and the intention is to allow schemes to use the full range of electronic communications.

Principles-based approach?

Views are sought on whether a more principles-based approach to disclosure should be adopted, incorporating a single high-level principle into legislation along the lines of: “Members should be given sufficient information that allows them to understand the benefits to which they will be entitled and any other relevant information that will enable each member to make decisions in his or her best interests”.

It is hard to see how such a subjective test would give schemes certainty that they had complied with the disclosure requirement, especially as different members will have different levels of understanding. Furthermore, it seems unlikely that such a broad principle would satisfy Article 11 of the IORP Directive, which sets out the minimum information which schemes are required to disclose to members and beneficiaries.


The DWP is considering whether it would be helpful to produce “best practice” guidance, apparently regardless of whether the single high-level principle were adopted or not – i.e. there could be guidance instead of or as well as regulations.