Pensions News Bulletin November 2015
1. Governments ‘Pension Wise’ review
The House of Commons Work and Pensions Committee recently completed a review of Pension Wise, the service introduced to offer guidance to people with defined contribution pension savings who are 50 and over.
The committee said that the success of new pension (freedom and choice) rules introduced in April depended on “good quality, co-ordinated and accessible guidance and advice”. Reports of “lower than anticipated” take-up of Pension Wise were therefore a cause for concern.
The Committee said that it had been difficult to judge the success of the service because of “a lack of both data on actual performance and benchmarks, targets or predictions against which to compare that performance”. It particularly criticised the Pension Wise website as “not fit for purpose” and impossible to personalise, and said that the current face to face guidance offering was insufficient.
We should sympathise. It is hugely difficult to provide useful, good quality and personally targeted guidance unless the presenter, guide or adviser is a real expert and has a lot of time to engage with the individual. Neither of these prerequisites apply to Pension Wise. Could they ever for a free service? What Pension Wise can do is highlight the list of issues to consider, give a brief explanation of their implications and provide information on websites and organisations that could provide further help. Warning about the variety of scams is also important. In this respect it may be doing okay.
Click here for the full report.
2. No requirement to be more socially responsible
A few months ago the Law Commission suggested there was a case to strengthen regulations under which trustees have to state in the Statement of Investment Principles whether environmental, social and governance (ESG) issues were considered when making investment decisions. The Commission said new reporting should explain how trustees value ‘financial’ and ‘non-financial’ factors, a terminology they preferred in place of ‘ESG.
Just recently, in response to consultation on the subject, the Department for Work & Pensions (DWP) said amending the regulations to offer distinctions between the two areas “would not necessarily lead to greater clarity for trustees”. Trustees were already aware of their responsibility to consider such matters the DWP believed, using surveys conducted by the Pensions and Lifetime Savings Association (PLSA) as examples.
This upset a number of groups who promote or lobby for more socially responsible investment and less investment in things which they believe do not fit this criteria.
It seems to me while governments and trades unions implicitly promote investment in all businesses which contribute to employment and taxation, and that while there is already a more socially responsible mood motivating actions, that trustees should continue to have freedom to exercise their fiduciary duty for the benefit of scheme members in the most effective way according to their judgement, the rules they already have to comply with, and the current ESG requirements.
Where do you stand on the matter?
3. Standard template for Trustees and IGC’s
The Society of Pension Professionals (SPP), renamed from the Society of Pension Consultants, has produced two standard reporting templates to help defined contribution scheme trustees and Independent Governance Committees (IGCs) comply with their obligations to produce their annual regulatory statements.
The trustee version is intended to reflect the requirements of regulation 23 of The Occupational Pension Schemes (Scheme Administration) Regulations 1996 and the IGC version the requirements in COBS 19.5.5. The templates provide a useful starting point and the expectation is that the user will adapt them to suit their specific circumstances. The intention is to review the templates in 2016 and update them to reflect experience. Comments on the templates are welcomed by the SPP and will be incorporated in later versions.
Having standard documentation should allow interested parties to make equivalent comparisons between pension schemes and the providers these bodies are overseeing.
You can download the full survey here.
Thank you for reading. Please contact me if you would like to discuss any of the subjects mentioned in the newsletter.