Significant new DC flexibilities were introduced on 6 April 2015

Retirement options

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.

Since 6 April 2015, DC pension savers aged 55 and over have more control over the use of their pensions savings.

The options bring a number of challenges for trustees, master trust and group personal pension providers and employers, such as:

  • which to offer within scheme, if any
  • how best to communicate them to members / customers
  • whether a scheme or personal pension provider 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/policy changes 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 number of DC/hybrid/cash balance schemes on the implementation of “bolt on” flexi-access drawdown funds (FADFs) ranging from simpler solutions through to bespoke solutions involving fund replication and a range of potential receiving vehicles
  • Advising master trusts on introducing in scheme drawdown
  • Advising employers, sponsors and trustees on the impact of retirement options on their benefit structures and arrangements
  • Advising in relation to options available on guidance and advice services for members approaching retirement and agreeing contractual documentation for this
  • Advising on pension transfers between trust and contract arrangements to enable members to benefit from the retirement options
  • Drafting bespoke member communication documents detailing retirement options in light of the DC flexibilities for DC, hybrid and cash balance schemes
  • Advising on changes to DC scheme default arrangements in the light of retirement options
  • Preparing retirement option and partial transfer policies for trustees of a large hybrid scheme
  • Advising employers on their obligations in relation to the retirement options and default funds
  • Putting in place contracts or changes to contracts in relation to new administration processes required as part of retirement benefit changes or the introduction of retirement bolt ons.