Pensions Scheme Act 2015, No. 8 (as amended)

The Pensions Schemes Act 2015 is a significant piece of legislation in the UK that aims to enhance the security and flexibility of pension schemes, particularly focusing on defined contribution (DC) schemes. The Act introduces measures to improve pension governance, increase transparency, and provide members with more options for managing their retirement savings.

Purpose: The primary purpose of the Pensions Schemes Act 2015 is to strengthen the regulatory framework governing pension schemes, ensure better governance and administration, and offer greater flexibility and security to pension scheme members. The Act seeks to protect the interests of savers and provide them with more control over their retirement savings.

Requirements:

1. Governance and Administration: The Act requires trustees and managers of defined contribution pension schemes to meet higher standards of governance and administration. This includes the establishment of independent governance committees to oversee the management and performance of the schemes.
2. Transparency and Disclosure: The Act mandates increased transparency in the disclosure of pension scheme charges, costs, and investment performance. This helps members make informed decisions about their retirement savings.
3. Flexibility in Retirement Options: The Act introduces provisions that allow members greater flexibility in how they access their pension savings. This includes the option to take their pension as a lump sum, drawdown funds over time, or purchase an annuity.
4. Collective Benefits: The Act facilitates the establishment of collective defined contribution (CDC) schemes, where contributions are pooled and invested collectively, providing members with potentially more stable outcomes compared to individual DC schemes.
5. Independent Advice: The Act requires that members receive independent financial advice before transferring or accessing pension benefits in certain circumstances, ensuring they understand the implications of their decisions.

Applicability: The Pensions Schemes Act 2015 applies to trustees and managers of defined contribution pension schemes, pension scheme members, financial advisors, and employers offering workplace pension schemes. It affects a broad range of stakeholders involved in the administration, management, and participation in pension schemes in the UK.

By enhancing governance, increasing transparency, and providing more flexible retirement options, the Pensions Schemes Act 2015 aims to improve the overall effectiveness and security of pension schemes, ensuring better outcomes for members as they plan for their retirement.

The Pensions Schemes Act 2015 includes specific evidence requirements aimed at improving the governance, transparency, and administration of pension schemes, particularly defined contribution (DC) schemes. These requirements ensure that trustees, managers, and other stakeholders maintain proper records and provide necessary information to members and regulatory bodies.

Key Evidence Requirements:

1. Governance and Administration Records: Trustees and managers of DC pension schemes must keep detailed records demonstrating compliance with governance and administrative standards. This includes minutes of meetings, decisions made by governance committees, and evidence of compliance with regulatory requirements.
2. Charge and Cost Transparency: Pension schemes are required to disclose information about charges and costs to their members. This includes maintaining and providing evidence of the fees associated with managing the pension fund, investment costs, and any other expenses that affect members' savings.
3. Investment Performance Disclosure: Schemes must provide clear and accessible information about the performance of investments. This requires keeping accurate records of investment returns, asset allocation, and performance benchmarks, which must be communicated to members regularly.
4. Member Communications: Pension schemes must document and retain records of all communications with members, including statements, notices, and other informational materials. This ensures transparency and helps members make informed decisions about their retirement savings.
5. Flexibility in Retirement Options: When members choose to access their pension savings, schemes must provide evidence that they have offered the required options, such as lump sums, drawdown funds, or annuities. Records must show that members were informed of their choices and the implications of each option.
6. Independent Advice Compliance: In cases where members are required to receive independent financial advice before transferring or accessing pension benefits, schemes must maintain records of the advice provided. This includes documentation of the advice process and confirmation that the member received appropriate guidance.
7. Collective Benefits Documentation: For collective defined contribution (CDC) schemes, detailed records must be kept regarding the pooling of contributions, investment strategies, and the distribution of benefits. This ensures transparency and accountability in the management of collective benefits.

These evidence requirements under the Pensions Schemes Act 2015 ensure that pension schemes operate transparently and effectively, providing members with the information they need to make informed decisions about their retirement savings. Compliance with these requirements helps protect members' interests and enhances the overall governance of pension schemes.