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Pensions Bulletin 2018/11

Our viewpoint

Government tables cold-calling ban clauses and strengthens the guidance requirement for DC benefits

The Government’s promised amendments to the Financial Guidance and Claims Bill in relation to cold-calling (see Pensions Bulletin 2018/07) have now been tabled.

A new clause makes provision for regulations to be laid before Parliament “prohibiting unsolicited direct marketing relating to pensions”.  If before the end of June in any year the regulations have not been made, the Government has to publish a statement by the end of July explaining why they haven’t and setting out a timetable for making the regulations.  The new clause also enables the Information Commissioner and Ofcom, the telecommunications regulator, to have a role in policing the ban.

The Government is also proposing amendments to the clauses that it introduced in February (see Pensions Bulletin 2018/05) that bring in a requirement for those running personal or stakeholder pension schemes, or providing “flexible” (broadly, money purchase or cash balance) benefits within occupational schemes, to ask members or their survivors at the point at which they require access to or transfer of their pension assets, if they have received Pension Wise information and guidance.

It appears that the amendments significantly strengthen the originally proposed requirements as providers will now need to ensure that the individual is "referred to appropriate pensions guidance” and “has either received appropriate pensions guidance or has opted out of receiving such guidance”.  Until now the Government had been proceeding purely on a nudge basis.

Other changes include:

  • Removing the alternative of receiving independent financial advice, as the Government has determined that individuals should be directed solely towards the Pension Wise information and guidance service; and
  • Making it clear that FCA rules and DWP regulations should make provision about how and to whom individuals are to indicate that they have received the Pension Wise service or expressly opted out

Comment

We are still no nearer knowing what the cold-calling ban will look like, but hopefully all will become clear when the regulations are laid, maybe even by this June.

The Government is quite clearly being pushed by MPs on the guidance referral requirement.  It now seems that individuals will not be able to access or transfer their money purchase benefits until they have gone through a formal process of receiving guidance or opting out.  Hopefully the final regime that emerges will make sense and provide the enhanced protection that all desire.

Spring Statement – no news for pensions but index-linked gilt issuance to fall

We were not expecting anything directly impacting pension schemes in Tuesday’s Spring Statement (see Pensions Bulletin 2017/52) and so it turned out – not even a launch of a consultation in an area directly impacting pension schemes.

But amongst the announcements was HM Treasury's 2018/19 debt management report which stated that the issuance of index-linked gilts is due to decrease from £28.4bn in 2017/18 to £21.7bn in 2018/19.  This will not only be a fall in absolute terms, but also as a proportion of expected total gilt issuance (from 24.7% to 21.1%).

The report says that the volume of index-linked gilt issuance in recent years – combined with the longer average maturity for index-linked gilts of 20 years, compared with 14 years for conventional gilts – has "consequences for the long-term inflation exposure in the public finances", risks which had also been raised by the Office for Budget Responsibility, the National Audit Office and the House of Commons' Public Accounts Committee.

This Pensions Bulletin does not constitute advice, nor should it be taken as an authoritative statement of the law.  For further help, please contact David Everett at our London office or the partner who normally advises you.

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