UK Pensions Regulator Says Retirement Income Education Could Improve
A press release said 57% of the 97 schemes for which communications was assessed had some scope for improvement in the standards of the retirement information sent to members, and 30% had alleged legislative breaches of retirement disclosure regulations. Six percent were referred to regulator casework teams to follow up the substantial changes required to their retirement literature or processes.
In a report on its assessment, the Pensions Regulator said it found scheme members are not always presented with helpful and timely information as they approach retirement. The most common breach the regulator found related to the requirement for the issue of information to members at least six months before they approach their normal retirement date (24% of schemes breached this requirement). In many of these cases, the relevant disclosures were made, but late, the report said.
The regulator admonished that scheme members must be made aware that their choices at retirement can make a big difference to their income in retirement. The report suggested trustees can add real value to the retirement process beyond compliance by:
- informing members of their options and the support available;
- encouraging use of the open-market option (OMO), where members are allowed to choose an annuity provider, regardless of fund size;
- facilitating access to advice on the OMO;
- monitoring member behavior and reasons for the behavior to be proactive and scheme specific in communications; and
- ensuring their scheme retirement process is controlled.
In addition, the report said scheme insurers should recognize that many trustees rely heavily on their material for meeting their retirement disclosure responsibilities and should ensure such material:
- is simple and informative;
- is fair and balanced;
- encourages the use of the OMO, regardless of fund size;
- is sent to trustees in time to enable them to start the member communication process at least six months before retirement; and
- reflects best practice.
The Pensions Regulator report is here .