New ‘wake-up packs’ come into force in November 2019
Since Pension Freedoms were introduced in April 2015, the FCA has been monitoring how the retirement income market has evolved.
One of the main concerns the regulator has highlighted in its Retirement Outcomes Review is that a significant number of consumers are not engaging with their retirement decisions in a way that will allow them to take full advantage of their pensions.
In order to combat this and increase consumer engagement, the FCA has stressed the need for better communications, support and guidance across the entire pension industry.
New measures in force from November 2019
Putting this into action, one of the measures which has now been brought in with effect from 1 November 2019 is the requirement for pension providers to issue its scheme members with an ‘Open Market Options’ statement.
Better known as a ‘wake-up pack’, this will be provided at certain points in a client’s life when they should be thinking about how they are going to take benefits from their pension, how it is going to support them and the lifestyle they desire in their retirement.
The main trigger dates for sending a wake-up pack to the member are immediately after their 50th birthday, immediately before their 55th birthday, and thereafter every five years until their pension is fully crystallised.
The pack will consist of a single page summary outlining the value of the member’s SIPP and the contributions being paid into the scheme, in order to make the member think about whether they are saving enough in their pension for when they retire.
In addition, the pack will also feature a list of retirement risk warnings flagging up the key issues the members will need to consider before deciding to take benefits. The particular risk warnings each member will receive will take into account the information available to us about them, such as:
- Their age
- The amount of any contributions they are making to the SIPP
- Whether they have protection for their pension.
Packs sent at age 55 and over will also contain the Money Advice Service factsheet Your Pension: It’s Time to Choose.
Wake-up packs emphasise the need for independent regulated advice
One of the most prominent aspects of the wake-up pack will be the emphasis on the need for the member to obtain independent regulated advice.
There will be a section which directs the member to the government’s free Pension Wise service. This is required by the FCA and therefore will be included regardless of whether the member has confirmed to us that they have appointed an independent financial advisor to act as an intermediary.
The packs will be sent directly to the member, with a copy also sent to their authorised advisor for information.
IPM is fully aligned with the objective of the FCA to provide our clients with all the help and assistance they need to make the most of their pension, so if there are any queries about the information contained in the pack or anything else to do with the administration of the SIPP then please contact us. Email info@ipm-pensions.co.uk or call 01438 747 151.