Retirement risk warnings and guidance

General code in force: 28 March 2024

1. Members with a defined contribution (DC) or cash balance pension pot have a variety of options for taking retirement benefits. There are no restrictions on the amount they can withdraw as cash, though there may be significant tax implications.
2. Depending on the scheme’s rules, a member may not be able to access their chosen flexible benefits directly from the scheme. They may need to transfer to another arrangement to gain access to the full range of options.

Retirement guidance

3. When giving members information about retirement options for their flexible benefits, by law the governing body must provide information on the government guidance service.
4. The governing body must:
   1. in certain circumstances^1,2,3, provide a statement informing members about the government guidance service (the guidance statement)
   2. Ensure the guidance statement recommends the member accesses the government’s guidance service and that they consider taking independent advice
   3. where contact is made by a relevant beneficiary⁴ wishing to access or to transfer for the purposes of accessing their flexible pension benefits, offer to book them an appointment with the government guidance service and take reasonable steps to book the appointment at a time and date suitable for them unless exempt⁵
   4. not proceed with an application to access or transfer flexible benefits, until the member has received guidance, or they opt out⁶. See Transfers out.
   5. provide the guidance statement (and any additional statement where required) where contact is made by the governing body, or by the member where the requirement to book an appointment as set out above does not apply, about what the member may do with their DC or cash balance benefits
   6. the guidance statement(s) may be given verbally unless requested in writing⁷
   7. identify any circumstances where there is a requirement to provide the information to individuals other than the member (for example, beneficiaries)
5. The governing body should:
   1. make members aware of their right to transfer their benefit to another scheme at any age, to access their benefits in a variety of different ways
   2. ensure all communications issued to members about their retirement options clearly set out what they need to consider, to make an informed decision about their benefits (see General principles for member communications)

Retirement risk warnings

6. Where scheme members with DC or cash balance benefits are approaching retirement, the governing body must by law provide certain information and risk warnings:
   1. issue retirement information to members setting out the options available on accessing their retirement savings within the scheme. The information must include either⁸:
      • a guide available from MoneyHelper ‘Your pension: your choices’ (or any replacement that is prepared or approved by us)
      • a statement that gives materially the same information
   2. provide certain ‘risk warnings’ to members when providing the member with an application form or another way to access their benefits (some exceptions apply⁹). The risk warning statement must:
      • contain information about the options available to members about their benefits and the risks associated with each¹⁰, or
      • provide personalised risk warnings tailored to the member’s circumstances
   3. highlight in the risk warning statement, the importance of reading the warnings and accessing pensions guidance or independent advice¹¹

Glossary

Annuity

A specific type of insurance policy, which can be purchased to secure an income for life at retirement.

Flexible benefits

Pensions benefits that may be drawn from a scheme and used for purposes other than purchasing an annuity (see section 74 of the Pension Schemes Act 2015).

Relevant beneficiary

A member of the scheme or a survivor of a member who has a right or entitlement to flexible benefits under the scheme.

Legal references

¹ Regulations 18A to 21 Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013. [Regulations 18A to 21 Occupational and Personal Pension Schemes (Disclosure of Information) Regulations (Northern Ireland) 2013]

² Part 1, Schedule 10 Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013. [Part 1, Schedule 10 Occupational and Personal Pension Schemes (Disclosure of Information) Regulations (Northern Ireland) 2013]

³ Regulation 18B Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013. [Regulation 18B Occupational and Personal Pension Schemes (Disclosure of Information) Regulations (Northern Ireland) 2013]

⁴ Regulation 18C (2) and (4) Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013

⁵ Regulation 18C(3) Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013. [Regulation 18C(3) Occupational and Personal Pension Schemes (Disclosure of Information) Regulations (Northern Ireland) 2013]

⁶ Regulation 18C (4) Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013. [Regulation 18C (4) Occupational and Personal Pension Schemes (Disclosure of Information) Regulations (Northern Ireland) 2013]

⁷ Regulation 18B(3) Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013. [Regulation 18b(3) Occupational and Personal Pension Schemes (Disclosure of Information) Regulations (Northern Ireland) 2013]

⁸ Paragraph 14, Part 3, Schedule 7 Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013. [Paragraph 14, Part 3, Schedule 7 Occupational and Personal Pension Schemes (Disclosure of Information) Regulations (Northern Ireland) 2013]

⁹ Regulation 19A Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013. [Regulation 19A Occupational and Personal Pension Schemes (Disclosure of Information) Regulations (Northern Ireland) 2013]

¹⁰ Regulation 19A(6) Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013 [Regulation 19A(6) Occupational and Personal Pension Schemes (Disclosure of Information) Regulations (Northern Ireland) 2013]

¹¹ Regulation 19A(4) Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013. [Regulation 19A(4) Occupational and Personal Pension Schemes (Disclosure of Information) Regulations (Northern Ireland) 2013]

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