With less than a week to go before the pension reforms come into force on 6 April, Deloitte has drawn up a checklist for pension scheme trustees.
The seven-point list ranges from legal advice to investment strategy.
Greg Morris, pensions director at Deloitte, states: "Since George Osbourne first announced pension freedoms for the UK in 2014's Budget, trustees have been looking at how they will implement these into their scheme."
Deloitte's checklist contains advice ranging from scheme administration to seeking legal advice.
It advises trustees to consult with employers on issues such as the cost to set up and administer new pension options, so they can determine the amount of flexibility to be granted to scheme members.
Communications to members should cover the latest changes and the degree of flexibility their pension scheme will offer, it says, with frequent communications required throughout the implementation phase.
Scheme administration should be reviewed, particularly around new minimum requirements to signpost members to the guidance guarantee during their retirement process, while also seeking to ensure members are properly instructed to find independent financial advice at the appropriate time.
Trustees should seek legal advice on issues arising from the Freedom and Choice changes and conduct a review of the Trust Deed & Rules.
When it comes to benefit options, the checklist advises that for DC Schemes, a final decision should be made as to the flexibilities offered within the scheme, including a review of annual benefit illustrations to reflect the new freedoms.
The process of notifying and recording should also be considered when the Money Purchase Annual Allowance is triggered.
For DB Schemes, as a minimum regulatory requirement, receipt of Independent Financial Advice must be confirmed and recorded before CETV completion.
Additional, and optional, considerations include whether CETVs should be provided as part of the retirement process, or whether individuals may take a non-statutory CETV at normal retirement as part of their standard scheme options.
The final point in the checklist relates to investment strategy.
For DC Schemes, a review should be taken of the default investment strategy, as well as the lifestyle strategy and switching period, to assess their appropriateness.
The range of investment funds available to members should also be a consideration both pre and post "retirement" age.
For DB Schemes the strategy should take into consideration the membership profile of the scheme which could change rapidly, and DB CETV requirements in response to possible liquidity and disinvestment issues.
Ongoing trends should be monitored in this regard for future investment strategy reviews.
Implementing within a timeframe that is already tight, this month has seen the possibility that current annuitants may also be granted similar freedoms, extending both the requirements and offerings of pension schemes.
Morris added: "Whilst it is not a requirement for pension schemes to offer any of the Chancellor's new flexibilities, at the very least there are aspects of the legislation that must be complied with. Crucially, this affects both DB and DC schemes."
First published 01.04.2015
Lindsay.sharman@wilmingtonplc.co.uk
