The Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013 came into force on 6 April 2014 and are relevant to all schemes. They consolidate the requirements of the previous, separate regulations relating to occupational and personal schemes, which are revoked and repealed.

The aim of the new regulations is to ensure that scheme members, beneficiaries and other interested parties receive a consistent level of information, regardless of the type of scheme of which they are a member. The key changes relate to statutory money purchase illustrations (SMPIs) and the requirement to provide information about lifestyling. Schemes are given greater flexibility as to the structure of benefits included in the illustration, with the aim of making the SMPI more relevant to members’ needs. The regulations address concerns expressed in the consultation about the timing of the first SMPI to take account of the introduction of auto-enrolment, so that schemes are not required to provide an SMPI before any contributions have been paid.

The key changes

The changes mean that trustees or scheme managers must:

  • provide information to members about a material alteration to the scheme “before or as soon as possible after” the alteration, and in any event within three months (regulation 8);
  • notify members about the use of “lifestyling” if their scheme uses this approach (regulation 18) – see further below; and
  • inform members in the annual investment report about the scheme's policy to exercising the rights attached to the scheme's investments (including voting rights) and the extent to which social, environmental and ethical considerations are taken into account (paragraph 30, Schedule 3).

DB schemes continue to be obliged to provide annual benefit statements only on request. The possibility of making such statements an annual requirement was considered and rejected.

The regulations provide comprehensive lists of information to be provided:

  • automatically
  • on request
  • about auto-enrolment
  • in a SMPI
  • in a benefit statement from a DB scheme.

New requirement for lifestyling information

There is a new requirement to provide information about lifestyling, explaining what it means, its advantages and disadvantages. Schemes must also provide information on whether lifestyling will be adopted; is likely to be adopted (and when); or has been adopted. This information must be given automatically to new and prospective members as part of the basic scheme information, and again between 5 -15 years before the member’s retirement date (unless it has been provided within the previous 12 months). The lifestyling information may be provided with existing communications, such as an annual statement.

The DWP has recognised that not all funds use traditional lifestyling funds. For example, some use “target date funds” and this approach may become more prevalent with the flexibility envisaged under the Budget reforms. In a target date fund, members’ contributions are invested in a fund designed to achieve the investment aims by a specific year. As with lifestyling funds, the member’s retirement income could be adversely affected if the target date of the fund and the member’s actual retirement date are different. The DWP intends that the provision to require schemes to provide information will cover all types of lifestyling, “including any that are introduced in the future”.