PASA issue guidance guarantee advice for DC administrators

Peter Dyer, Director of PASA said:

“The beginning of December sees an important milestone, marking the statutory four-month minimum period by which administrators must communicate with DC scheme members due to retire from April 2015. As further details on the Guidance Guarantee have not yet been delivered by the Treasury, we are advising DC administrators to make contact with relevant retirees now - rather than stockpile communications and risk censorship for not complying with the statutory minimum period while waiting for the final details to emerge.

He added:

“PASA’s recommendation to DC administrators is to comply with the requirement to contact scheme members who are retiring from next April as soon as possible and preferably before the start of the minimum four months' period in December and to include reference to the guidance that is expected to be made available shortly.

“In practice this means that existing scheme literature needs to be reviewed to make sure it refers to both annuity purchases and the option to draw benefits in cash form. The cash option should be presented as one to be very carefully considered and for which independent financial advice is appropriate. We are also recommending to DC administrators that it would be wise to run this revised wording past the Scheme's legal advisor to ensure it reflects the upcoming changes without introducing an unintended bias towards either option.”