The Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) have published a new version of the ‘Guide for employers and trustees on providing support with financial matters without needing to be subject to FCA regulation’, which was last produced in 2017. The FCA recently consulted on a draft version of the updated guidance, and the final version has been published together with new FCA guidance on DB transfer advice.
The guidance includes some new content, including a new section on DB benefits. The guidance notes that employers and trustees are not generally in the business of arranging transactions or giving regulated advice and do not normally receive any commercial benefit for providing information or assistance with pensions or other financial matters, meaning that in most cases they should be able to assist without requiring FCA authorisation. The guidance is drafted to focus on actions that do not involve arranging or advising, as the FCA considers that this is the best way of ensuring that trustees and employers are not considered to be in the business of arranging transactions or providing regulated advice.
The key message is to keep information on retirement options generic and avoid anything which might steer a member towards choosing a specific investment product. So it is fine to explain, for example, the differences between annuities and drawdown – and figures provided as to the benefit outcome should be based on factual information rather than selected assumptions. So when, for example, comparing the benefit outcome as between keeping a DB pension and a transfer/conversion to flexible benefits, the illustration should be based on published open market annuity rates rather than assumptions as to investment returns and charges. The aim should be to avoid any suggestion that one option is thought better than another: that would potentially amount to advice outside what the employer/trustees are allowed to provide.
Trustees and employers should review practices and communications in light of the new guidance and discuss matters with advisers as appropriate.
Read the guidance.
New guidance has been published on compliance reporting by trustees to the Competition and Markets Authority (CMA). Under the CMA rules, in-scope trustees are required to set strategic objectives for investment consultancy providers and, if they use fiduciary management services, to run competitive tenders. They must also submit an annual compliance statement and signed certificate – as the CMA regime is not expected to be replaced before 2022, trustees will, in due course, need to submit the annual CMA compliance paperwork in respect of the current year. The short guidance statement provides information on submitting this to the CMA.
Read the guidance.
TPR has published its latest annual report on the DC landscape, which covers approximately 28,000 schemes from the pension schemes register as at 31 December 2020; approximately 26,700 of these were schemes with fewer than 12 members.
The latest report indicates the continuing trend to consolidation, particularly among smaller schemes. Scheme memberships increased by 11% over the past year (compared to 17% the previous year), and have increased by 812% since 2010. In the past year, deferred memberships increased by more than active memberships.
Read the report.
The Work and Pensions Committee has published a report on pension scams, as part of its inquiry into the impact of the pension freedoms.
The report discusses a number of current issues relating to scams, and makes a number of recommendations. The government and other relevant bodies are expected to respond to the report – we will report in due course on whether any of the Committee’s recommendations are likely to be implemented. We are expecting the government to consult shortly on draft regulations to restrict statutory transfer rights (following powers contained in the Pension Schemes Act 2021).
Read the report.
The Pensions Ombudsman (TPO) has published new factsheets on its Early Resolution Service and complaint investigation process, which are aimed at complainants. These are the latest in a number of factsheets produced by TPO in recent months.
Read ‘The Early Resolution Service’ and ‘How we investigate complaints’.