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Certain information relating to the main details of the scheme
must be made available to the scheme members and all employees who
may be eligible to join.
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The Occupation Pension Schemes (Disclosure of Information) Regulations
1986 introduced specific regulation on provision of details relating
to the scheme constitution, administration, finance, rights and
obligations.
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Trustees must now make available copies of an annual report, audited
scheme accounts, latest actuarial statement, names of trustees,
names of professional advisers, investment report containing investment
policies and portfolio make up.
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Regarding portfolio makeup, there is a specific requirement where
large scale 'concentration of investment' is involved: this means
investment of more than 10% of the scheme assets in any one investment.
This excludes investment in the employer. Such an investment must
be notified to the actuary. The scheme audited accounts, however,
must provide details of any single investment which is 5% or more
of the fund
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From 6th April 2003, subject to certain exceptions, active and
deferred members of personal pensions, stakeholder pensions and
occupational money purchase schemes must be supplied with Statutory
Money Purchase Illustrations (SMPIs). The aim of these is to provide
an illustration expressed in today’s money terms.
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The illustration must show an income figure but not tax free cash.
The underlying fund used to produce the income figure will not be
shown.
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Certain catories of members do not have to be supplied with SMPIs.
For example, anyone whose benefits are less than £5,000 where
no contributions are being paid and the member has been told that
no statement will be issued unless further contributions are paid.
In addition, schemes which provide a benefit which is greater of
the money purchase or final salary basis do not have to supply illustrations
if the trustees do not believe that the money purchase basis will
produce benefits in excess of the final salary basis.
The following information must be supplied in conjunction with an
SMPI:
- a statement that the information must be provided by law;
- where the member can obtain further information;
- the pension expressed in today’s prices;
- the pension payable on retirement will depend on the actual performance
and cost of buying an annuity at the time and these will be different
from the assumption used;
- assumptions used for future contributions;
- the member‘s assumed retirement date;
- the illustration date used;
- a statement that the information is an illustration only and
that it does not represent a promise or guarantee and should not
be the only consideration in making decisions on pension arrangements;
- a warning that the calculation has been made by reference to
assumptions required by guidance and also that the assumptions made
about investment performance may not correspond with the investments
actually made.
