Last month’s Pensions Update reported a number of developments, including DWP guidance for employers and the Pensions Regulator’s five-step checklist for employers. Further noteworthy developments are:
- The Regulator’s five-step checklist for trustees.
- The Regulator’s detailed guidance for employers on their automatic enrolment duties (more in-depth than the DWP guidance), drafted on the basis that the Pensions Bill changes to automatic enrolment will be implemented (see our April update) but to be updated further once the Bill has become the Pensions Act 2011.
DWP guidance on the default option for DC automatic enrolment schemes, both occupational and personal. Regulations making the contents mandatory may be issued if the guidance is “wilfully ignored”. Covering governance, design, review and communication, it expects the default option:
- To have a high level objective clearly setting out aims and strategy;
- To take account of the likely membership profile;
- To be appropriately and competitively priced, with a breakdown of charges clearly disclosed;
- Not to be structured so as to lock members into it;
- To be communicated in a clear manner; and
- To be reviewed at least every three years and in certain circumstances, with any action following review being communicated to members; and performance level of the fund should be checked regularly throughout the year.
Changes to the FSA Conduct of Business Sourcebook from 1 October 2012 in relation to GPPs being used for automatic enrolment. Key changes include:
- Confirmation that automatic enrolment of employees into a GPP in compliance with the statutory duty does not breach the Distance Marketing Directive’s prohibition on inertia selling;
- Removal of certain disclosure requirements on availability of stakeholder pensions;
- Clarification that correct application of the statutory one-month opt-out period following the automatic enrolment date will count as compliance with the COBS 15 requirement for a 30-day cancellation period from the date of the contract to join a personal pension scheme;
- Extension of the prohibition on unsuitable recommendations to opt out of an occupational pension schemes in favour of a personal pension to cover opting out of a GPP.