The Pensions Regulator

The Pensions Regulator publishes annuity leaflet for pension scheme members

Ref: PN05-10
6 April 2005

The Pensions Regulator has today published a booklet, "Your retirement choices - defined contribution occupational pension schemes".

From today, trustees of defined contribution (DC) occupational pension schemes will have to inform scheme members approaching retirement about the different types of annuities available. Trustees can meet this requirement by providing members with a copy of the regulator's booklet or by providing their own literature.

The law no longer requires members with DC pensions to purchase an index linked annuity. The booklet tells members about the changes and how these may affect their choices as they approach retirement. It will ensure that individuals receive the information they need when buying an annuity. Members need to make important decisions over issues such as indexation, so it is essential that they are well informed.

The leaflet is available on the Pensions Regulator's website and printed copies will be available from April 22. They can be ordered from the Pensions Regulator's customer support team by emailing customersupport@thepensionsregulator.gov.uk or calling 0870 6063636.

Editor's notes

1. Trustees will be required to send the appropriate information (along with the other information that is already required) at least six months before the member reaches normal pension age. This means that only members retiring after October 2005 will be covered by these new requirements. If trustees wish to provide the information to members retiring before this date this would be helpful.
2. The new information requirements are set out in regulations. The Occupational Pension Schemes (Disclosure of Information) Regulations 1996 are amended by the Personal and Occupational Pension Schemes (Indexation and Disclosure of Information) (Miscellaneous Amendments) Regulations 2005 (SI704). These regulations can be found at -
   www.legislation.hmso.gov.uk/stat.htm#2005.
3. Changes made in the Pensions Act 2004 will remove the requirement to index link defined contribution (DC) rights which have accrued since 1997. The Indexation and Disclosure Regulations remove the pre-1997 DC indexation requirements. The changes affect pensions coming into payment on or after 6 April 2005.
4. The indexation requirement will remain for defined-benefit (DB) pensions. The Pensions Act 2004 reduces the indexation cap from 5% to 2.5% for DB pensions paid in respect of pensionable service on or after 6 April 2005.
5. The Financial Services Authority are introducing a similar information requirement for personal pensions - and have their own leaflet.
6. The Pensions Regulator has been established as the new regulator of work-based pensions in the UK, with wider and more flexible powers under the Pensions Act 2004. It replaces Opra which has ceased to exist.
7. The new powers of the Pensions Regulator include the ability to:
   • collect more detailed scheme information;
   • impose a statutory obligation on 'whistleblowers' to report suspected breaches of the legislation to the regulator;
   • issue improvement notices and third party notices, enabling the regulator to ensure problems are put right;
   • freeze a scheme that is at risk, while the regulator investigates; and
   • prohibit trustees who are judged not fit and proper to carry out their duties.