a stronger nudge – flexible access and Pension Wise (85)
by Roderick Ramage, solicitor, www.law-office.co.uk
first published by distribution to professional contacts on 27 July 2022
This article is not advice to any person and may not be taken as a definitive statement of the law in general or in any particular case. The author does not accept any responsibility for anything that any person does or does not do as a result of reading it.
2014 to 2022 – flexible access and Pension Wise
The Taxation of Pensions Act 2014, s1
and sch 1, introduced, from 6 April 2015, pension flexibility for members of
money purchase pension schemes on reaching the normal minimum pension age (55,
but will be 57 from 6 April 2028).
Members were given and still have the following options:
a lifetime annuity;
drawdown, under which there are no limits how much or how little a member could
take each year; or
a lump sum payment,
under which the whole of the fund could be drawn down as an uncrystallised
funds pension lump sum, without buying an
annuity or putting the fund into draw down.
In preparation for this requirement,
HM Treasury announced on 12 January 2015 the
name, Pension Wise, and logo of the new pensions guidance service, which has
its own website, and on 16 September 2015 announced that responsibility for
Pension Wise would move to the Department for Work and Pensions by the end of
the financial year.
– a stronger nudge
The regulations which have been made
are the Occupational and Personal Pension Schemes (Disclosure of Information)
(Requirements to Refer Members to Guidance etc.) (Amendment) Regulations 2022,
SI 2022/30 were brought into force on 1 June 2022, to amend the Occupational
and Personal Pension Schemes (Disclosure of Information) Regulations 2013, SI
2013/2734, including the substitution of the following for the definition in
the 2013 regulations.
guidance” means information or guidance provided by any person in pursuance of
the requirements mentioned in section 4 of the Financial Guidance and Claims
Act 2018 (information etc. about flexible benefits under pension schemes);
The Financial Conduct Authority’s
rules about the stronger nudge to pensions guidance are its handbook as
Practice Statement PS21/21.
Under the 2013 Disclosure Regulations
as amended, trustees must offer to book a Pension Wise appointment for the
member before actioning the member’s application to start to receive or to
transfer his or her benefits and must not action the requests. If the member accepts, the trustees must take
reasonable steps to book an appointment.
They must give the member details how to book an appointment if either
the member does not accept the offer or the trustees are unable to book a
suitable appointment. They may implement
the member’s application only if they have received confirmation that the member has either received guidance
or has given an opt-out notification.
Stronger nudge does not apply if the
member is under age 50 or if the reason
is not for the purpose of receiving flexible benefits, eg it is to consolidate
The FCA Handbook PS21/21 is much the
same, but with the difference that the member may notify his or her opt-out
when applying to start benefits or transfer, while an opt-out under the 2013
Disclosure Regulations must be made in a communication made solely for the
purpose of opting out.
The agreed relationship between the
FCA and TPR is set out in their joint regulatory strategy for pensions on TPR’s
website under the heading “FCA and TPR joint strategy”. An approximate division of their regulatory
functions is that (with little regard to the PSA 1993 s1 definitions) TPR is
responsible for occupational (including GGPs(!) and public service schemes, and
the FCA for contract pensions eg SIPP and personal pensions and functions such
as financial advice and income products eg annuities.
copyright Roderick Ramage
click below to