Retirement flexibilities

DC savers now have more at-retirement choices than ever before, yet the challenges this creates for trustees, providers and employers should not be underestimated.

On 6 April 2015, significant flexibilities were introduced for DC pension savers to give people aged 55 and over more control of their pensions savings, and to remove the requirement to purchase an annuity.

The new flexibilities bring a number of challenges for trustees, providers and employers, such as how best to communicate the options to members, what benefit options should a scheme offer, and whether a scheme needs to revise its investment strategy to take account of the changes in member decision making.

We advise on all these challenges, including drafting member communications, how to balance providing sufficient information with avoiding giving “advice”, and drafting deeds of amendment to introduce new benefit options into the scheme’s trust deed and rules and/or policy documentation. We also advise on how to change investment options and transfer processes.

Recent experience

  • Advising the trustees of a large DC scheme on the implementation of flexi-access drawdown funds (FADFs), one of the few schemes to have done so as a result of the retirement flexibilities
  • Advising providers and trustees on the impact of the flexibility options on their benefit structures and arrangements
  • Advising on pension transfers between trust and contract arrangements to enable members to benefit from the flexibility options
  • Drafting trustee booklets providing guidance on the benefits and structures of a DC scheme
  • Drafting bespoke member communication documents for hybrid and DC schemes
  • Advising on changes to DC scheme default arrangements in the light of the flexibilities and the charge cap
  • Preparing retirement flexibility and partial transfer policies for trustees of a large hybrid scheme
  • Advising employers on their obligations in relation to the flexibilities and default funds.