Pensions Regulator investigation finds mixed standards in DC pre-retirement literature

Good practice in the provision of pre-retirement literature in DC trust-based schemes is the focus of a report published today by the Pensions Regulator.

Material from 97 trust-based DC schemes was assessed on adherence with legislative requirements, good practice in areas such as the description and prominence of the Open Market Option, and the use of clear, plain English.

The review has provided valuable insight into current practice in this area and has highlighted that levels of compliance and good practice vary widely across the DC market.

Of 97 schemes who submitted literature:

• 98% offered the open market option (OMO), although take up of the OMO was viewed as remaining low, at 23% of DC members retiring
• 57% of schemes had some scope for improvement in the standards of the retirement information sent to members
• 30% had alleged legislative breaches of retirement disclosure regulations
• 6% were referred to regulator casework teams to follow up the substantial changes required to their retirement literature or processes

Following the publication of the report, a letter will be sent to 4,500 schemes, highlighting the findings of our investigation and encouraging trustees to review the pre-retirement literature sent out to their members.

“Compliance with the legislative requirements is important as a minimum standard, says June Mulroy, Pensions Regulator executive director of operations.

But we expect to see adoption of good practice as the norm. This will help members to make the right decisions at retirement, which we recognise can make a significant difference to the income they receive.

It is encouraging to see examples of excellent practice, but we do recognise that there is room for improvement. The economic downturn has had an impact on the value of many DC members' pension savings and as such the importance of making informed decisions is higher than ever.”

The study is part of an ongoing campaign focused on increasing the support and guidance offered to members in DC schemes through improving standards in administration and governance across the DC market.

To view the DC pre-retirement literature review report visit:

http://www.thepensionsregulator.gov.uk/docs/ RetirementInfoDCMembers.pdf

For more information on our ongoing work on improving standards in DC visit our website: http://www.thepensionsregulator.gov.uk/doc-library/campaigns/dc.aspx

The Pensions Regulator is the regulator of work-based pension schemes in the UK, with objectives to protect members' benefits, promote good administration and reduce the risk of calls on the Pension Protection Fund. Our approach is risk-based focusing on education and enablement, with enforcement where appropriate. We have the ability to: 

• collect information about pension schemes; through scheme returns, under the scheme funding regime and as well as statutory (including whistleblowing) reports;
• issue notices requiring actions to tackle non-compliance, prohibit trustees who are judged not fit and proper to carry out their duties or appoint independent trustees;
• direct pension schemes as to how to calculate their liabilities and the contributions required;
• issue a contribution notice where there is an attempt to avoid liabilities, or a financial support direction where the employer is a service company or insufficiently resourced.

Katherine Long 01273 811859
Ben Lloyd 01273 627208
Ruth Hallam 01273 627752
Out of hours 01273 648496
www.thepensionsregulator.gov.uk

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Customer support 0870 6063636
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