Trustees and providers of defined contribution plans in the U.K. will be on the hook for the quality and acceptance of guidance provided to participants when accessing and transferring savings at retirement, under a government proposal.
The U.K. Department for Work and Pensions is seeking views on its proposal, which would require providers of DC arrangements to ensure that plan participants choose to either receive guidance or deliberately opt out of receiving it.
As part of the new requirement, the DWP wants trustees and managers to explain to participants the implications of transferring and accessing retirement accounts early, and to help arrange an appointment with a specialist to receive guidance. The DWP is also proposing that participants separately decide to opt out of receiving guidance.
Currently, trustees and managers are only required to tell plan participants that they should consider taking independent advice when accessing their retirement plan when they become eligible at age 55. Providers are also required to give details on how participants may access guidance. But they are not required to ensure that the guidance was taken.
Financial Conduct Authority data showed that in 2019-20, half of all retirement accounts were accessed without prior advice or guidance.
Under rules introduced in 2015, plan participants at retirement must choose a new provider to manage their savings during retirement, or elect to take cash or an annuity.
The consultation runs until Sept. 3.