Although not one of the more high profile changes to pensions legislation to affect occupational pension schemes from 6 April 2016, the Department for Work and Pension’s (DWP) decision to put on a statutory footing the guidance previously issued by the Pensions Regulator that recommended trustees provide generic risk warnings to members approaching retirement and who were considering flexibly accessing their benefits is a significant one.


In an effort to deter members from making poor financial decisions following the introduction of the new flexible benefits regime in April 2015 (for example by taking all their benefits as a cash lump sum when they have no other retirement provision bar the state!), the Regulator issued standard form wording within its guidance for issue to members approaching retirement and considering taking advantage of the flexibilities. The wording made general observations about the different ways of accessing benefits, for example noting that those in ill-health may be eligible for enhanced annuities or warning that those choosing flexi-access drawdown should consider how much income they needed each year etc. However, as with all of the Regulator’s guidance, it remained an example of expected best practice rather than a legal requirement.

So what’s changed?

Whilst many schemes complied with the requirements of the guidance, the DWP remained concerned that not all had. As such, legislation[i] has now been introduced that means trustees of occupational pension schemes which offer flexible access options now have a legal obligation to provide certain written information to members who are considering taking advantage of the new flexibilities.

Key points to note include:

  • Which schemes? – this requirement will only apply to occupational schemes that provide flexible benefits. Where the member is transferring out non-flexible benefits at retirement in order to access the flexibilities in another scheme, the transferring scheme will not need to provide risk warnings.
  • Wording – the legislation provides clear instruction on what should be included in a “retirement risk warning”.  The warning should be a generic statement that sets out the characteristic attributes and features of an annuity, lump sum and drawdown pension (depending on which options are offered under the scheme).  Characteristic attributes and features are deemed to be those that “have the potential to adversely affect the retirement income of the member”[ii]. Members should also be warned of the factors that “have the potential to affect the appropriateness of an annuity, lump sum and drawdown pension for a member such as: the impact of health status and lifestyle choices; whether a member has dependants, is in debt or in receipt of means tested benefits; and any other relevant factors[iii].
  • Timing – the information will need to be given at the same time the member is provided with the means to apply for benefits (e.g. via an application form, online access etc.).
  • Previous warnings – a generic risk warning need not be given where (i) the scheme already voluntarily provides risk warnings tailored to each individual member’s specific circumstances, (ii)  a retirement risk warning has been provided in the previous 12 months or (iii) an “appropriate” risk warning (as defined in the legislation) has already been provided.
  • Acknowledgment – when giving a retirement risk warning to a member, the trustees must also give the member a statement that asks the member to note the importance of reading the retirement risk warning and accessing pensions guidance or independent advice.

Next steps

Trustees of occupational pension schemes that provide flexible benefits should ensure their retirement processes comply with the requirements of the legislation. Those schemes that already adhere to the principles of the Regulator’s guidance may not need to make many (if any) changes to their processes but advice should be sought if in doubt.

This post was contributed by Paul Wild. For more information, email

[i] Regulation 19A of The Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013 (the Disclosure Regulations)

[ii] Regulation 19A(6)(b)(iii) of the Disclosure Regulations

[iii] Regulation 19A(6)(b)(iv) of the Disclosure Regulations


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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.