An investigation into the quality of pre-retirement literature by the Pensions Regulator has found more than half of schemes have room for improvement and three out of 10 are breaking the law.
TPR assessed material from 97 trust-based DC schemes on adherence with legislative requirements, good practice in areas such as the description and prominence of the open market option, and the use of clear, plain English. The regulator says the research shows levels of compliance and good practice vary widely across the DC market.
The data shows 98 per cent offered the open market option, although take up of the OMO was viewed as remaining low, at 23 per cent of DC members retiring.
It found 57 per cent of schemes had some scope for improvement in the standards of the retirement information sent to members, while 30 per cent had alleged legislative breaches of retirement disclosure regulations.
It referred 6 per cent of cases to regulator casework teams because substantial changes to their retirement literature or processes were deemed necessary.
Following the publication of the report, a letter will be sent to 4,500 schemes, highlighting the findings of our investigation and encouraging trustees to review the pre-retirement literature sent out to their members.
The study is part of an ongoing campaign focused on increasing the support and guidance offered to members in DC schemes through improving standards in administration and governance across the DC market.
June Mulroy, executive director of operations at TPR says: “Compliance with the legislative requirements is important as a minimum standard. But we expect to see adoption of good practice as the norm. This will help members to make the right decisions at retirement, which we recognise can make a significant difference to the income they receive.
“It is encouraging to see examples of excellent practice, but we do recognise that there is room for improvement. The economic downturn has had an impact on the value of many DC members’ pension savings and as such the importance of making informed decisions is higher than ever.”