The FSA has published a consultation paper outlining changes to the FSA Handbook that will bring GPPs within occupational scheme regulations, following the Government’s confirmation of the workplace pension reforms.
The regulator says the changes are necessary to ensure consumers remain adequately protected and that interactions between FSA and Department of Work and Pensions rules do not create unnecessary barriers within the workplace pension market.
The policy proposals fall into two categories: the use of group personal pensions (GPPs) for automatic enrolment; and protecting consumers in the changing pension landscape.
The new rules will make it clear that automatic enrolment does not fall within the scope of the Distance Marketing Directive (DMD).
They will also clarify that FSA and DWP rules for cancelling and opting out are interchangeable and that only one process needs to be followed.
The FSA will also extend to GPPs the rules that mitigate the risk of poor advice being given in relation to occupational pension opt-outs.
The FSA also proposes to extend rules around additional contributions to encompass all workplace schemes. Currently the Handbook stipulates that advisers must consider arrangements within an existing workplace scheme before recommending alternatives, but this does not include GPPs.
The consultation period will close on 9th February 2011.
Sheila Nicoll, the FSA’s director of conduct policy, says: “These proposals mainly affect those involved in the provision, distribution and operation of group and individual personal pensions. But anybody who has a pension now, expects to make contributions in the future, or who will be automatically enrolled from 2012 will also be affected.
“With the introduction of automatic enrolment and the National Employment Savings Trust, the pension landscape is going to change significantly. It’s crucial that we update our requirements so consumers are protected and we identify and remove any overlaps between FSA and DWP rules that might create unnecessary barriers for employers.”