The DWP's red tape review identified the Disclosure of Information Regs as the sole information item that needs serious reviewing, but, even if this is the case, Aries director Ian Neale asks: "Will this typical painfully-long gestation actually give birth to real simplification next year?" 

From the DWP's red tape review the sole candidate emerging with discredit is the Disclosure of Information Regs (a few other potential targets, notably the substantial rump of contracting-out legislation, were ruled out of court from the start). This much is clear from the new DWP paper "Reinvigorating workplace pensions" (aka 'Defined Ambition', or 'DA'). In fact, a commitment to simplify these regs is the only concrete advance offered. We're promised a consolidation of the three existing sets of regs under the Disclosure banner, with some simplification of terminology. A consultation draft is to appear "early next year".

This idea of simplifying the disclosure regs has a very long history, going back at least ten years to proposals in the Pickering Report. The DWP first consulted on amending regs back in September 2005, but those proposals were abandoned. Then, in March 2009, the possibility was floated of switching from highly-detailed prescription to a principles-based approach instead but this too fell by the wayside. One reason was that schemes which complied with the current regs would have had to alter their procedures. Another was the tension between the desire for on the one hand simpler and less costly administration, and on the other for certainty about the requirements. Instead, significant amendments were eventually made to the existing regs in December 2010, including permission for a website to be used.

Two years further on, the DWP now recognises the reality that hardly anyone ploughs through the prescribed verbiage in their annual Statutory Money Purchase Illustration (SMPI). The DA paper acknowledges many will find it "more relevant, engaging and accessible if it were presented in a short, simple letter or email with signposting to further detail on a website". This might require a paradigm shift, however, from the concept of disclosure and its attendant implication that information is basically secret, but some might be released, to the more proactive idea of open provision of information.

The DWP is considering a new draft Code of Practice for trust-based DC schemes, to add weight in this direction. However, it must also recognise that the vast majority of workplace pension arrangements set up in the past few years have been GPPs. We are promised that overlaps with the FSA's Conduct of Business Sourcebook for personal pensions are to be removed: this is important because while The Pensions Regulator has responsibility for regulating trust-based DC schemes, contract-based schemes (such as GPPs) are presently the fiefdom of the FSA.

Will this typical painfully-long gestation actually give birth to real simplification next year? The rise and rise of the compensation culture has served in the past to incline providers to prefer detailed regulations, because however costly compliance becomes it is easier to recover via charges than to bear the unquantifiable risks of disputes, fines from the Regulator, and references to the Pensions Ombudsman which might arise from differing interpretations of what ought to be done.

Ian Neale, director Aries Pension & Insurance Systems Ltd.