Changes to disclosure requirements from 6 April 2014

Introduction

Revised disclosure regulations (“the new regulations”) will come into force on 6 April 2014.

In this Alert:

• Key points 
• Background
  
• The new regulations
  
• What’s new?
  
• Action
  

Key points

• The new disclosure regulations aim to consolidate and simplify those currently in place.
• Schemes which adopt a lifestyling investment strategy will be required to inform members of this twice: both as part of their basic scheme information and again between five and fifteen years before their retirement.
• Trustees should act now to ensure they will be ready to comply with effect on and from 6 April 2014.

Background

In February 2013, the DWP issued a consultation which sought views on proposals to consolidate, simplify, update and, where possible, harmonise the disclosure requirements for occupational and personal pension schemes (please see our Alert: Disclosure Consultation 2013 – Third time Lucky?).

A response to the consultation was published in July 2013 which made minimal changes to the proposals (please see our Alert: Response to consultation on disclosure).  However, following strong representations that schemes should be allowed time to make changes to their systems and notifications in order to be able to comply with the new regulations their introduction was delayed from October 2013 to April 2014.

The new regulations

The new regulations aim to:

• Simplify the structure and language of the existing disclosure regulations
• Remove any disclosure requirements for personal pensions which are duplicated by those in the FCA requirements
• Simplify some of the basic information which occupational schemes are required to disclose to prospective and new members
• Make a number of changes to benefit statements and SMPIs which are intended to make these more flexible and relevant to members’ needs
• Clarify the rules about giving information electronically (by email or on a website) and amend other private pensions legislation to make clear that all information may be given by electronic means.

What’s new?

Key changes include:

• Where a scheme contains provision for lifestyling (the process by which assets are moved into less volatile investments in the run-up to retirement), members will have to be informed whether such a strategy has, or will be adopted (and if so when) and its advantages and disadvantages, both as part of the scheme’s basic information and again between five and fifteen years before retirement
• Schemes will no longer have to automatically issue SMPIs to new members where no contributions have been made and there are no accrued benefits, or where the member is in their auto-enrolment opt-out period when the statement is due.  However, schemes may continue to send a statement if they wish to do so.
• Some of the basic information which occupational schemes are required to disclose to prospective and new members has been simplified.

Action

Trustees should act now to ensure their disclosure systems will be ready to comply with the new regulations on and from 6 April 2014.  Please speak to your usual Sackers’ contact if you would like us to review your member communications to ensure your scheme complies.