Three-in-ten defined contribution schemes have breached retirement disclosure regulations, according to the Pensions Regulator.
The Pensions Regulator scrutinised 97 trust-based defined contribution pension schemes, assessing each for its adherence to legislation, good practice and use of clear, plain English. It found that 30% of providers had alleged legislative breaches of retirement disclosure regulations. Of these, 6% were referred to casework teams to assess requirements to rethink their retirement literature or processes.
The regulator also announced that it will send a letter to providers of 4,500 schemes, highlighting its findings and encouraging trustees to review the literature it sends out to pre-retirement customers.
Julie Mulroy, Pension Regulator executive director of operations, said: ‘Compliance with the legislative requirement 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.’
In September 2009, through shopping around a Male Smoker aged 65 with a £50,000 purchase price from their DC fund could potentially receive a 35% increase in monthly income. This would increase their monthly income from £256 per month to £346 per month. This would give them almost £11,000 extra income over the course of a 10 year retirement.
Given the significant gains available from shopping around for an annuity it is important for all schemes to provide clear information and guidance to their members.
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