The National Association of Pension Funds has published its response to the Department for Work and Pensions’ (DWP) consultation on ‘Better workplace pensions: further measures for savers’.
In its response, the NAPF agrees with the consultation’s areas of focus, but argues the speed of change is too great and inadvertently puts scheme members’ interests at risk. It highlights that following the Budget every scheme will now have to: review its investment strategy to ensure it can adapt to the unpredictability introduced to the decumulation phase; adjust all of its member communications to reflect the Budget’s changes; and, work towards ensuring a ‘guidance guarantee’ (the nature of which is yet to be confirmed) is in place for scheme members by April 2015.
Joanne Segars, Chief Executive, NAPF, said:
“NAPF strongly supports the Government’s ambition to improve minimum quality standards in workplace pension schemes, but it is difficult to recall a time when UK workplace pensions have had more to deal with. The Budget set out some of the most far-reaching reforms to pensions in over ninety years and while much of the detail of these reforms is yet to be confirmed we do know they must all be implemented by April 2015. In this context asking schemes to implement the 0.75% charge cap at the same time risks forcing schemes to do too much too quickly. Even with the best intentions, this can only jeopardise good outcomes for scheme members and schemes should be given time to put the changes from the Budget in place first. We recommend the Government reviews the timetable it has laid out to ensure it allows room for schemes to get this right, not just get this done.”
Key recommendations within the NAPF’s consultation response include:
• Schemes should be given 12 months from April 2015 to explain to TPR or the FCA how they are planning to comply with the charge cap.
• The charge cap should provide sufficient flexibility to take account of new requirements that may fall on schemes as a result of the IORP directive.
• The Government should review its position on what can be covered by the charge cap in light of the Guidance Guarantee requirement.
• The DWP should use Pension Charges Made Clear: Joint industry code of conduct as the basis for any new rules on the consistent disclosure of charges and services by pension schemes.
A copy of the NAPF’s response can be found on its website here.
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