NAPF: There are still too many unknowns on pension 'freedoms'

National Association of Pension Funds members are keen to get on with the job of implementing these reforms, but there is still little detail about how the new requirements will work.

Until the final regulations are published, schemes’ ability to apply changes to member communications is impeded, administrators are less likely to invest in changing systems and providers are held back in designing new at-retirement products.

Our first priority must be to ensure schemes stand a fighting chance of implementing the reforms in time

It is vital the reforms are kept as simple and easy as possible for schemes to implement, while as safe as can be for savers.

The NAPF has been working hard consulting with members, and working with the government and regulators to achieve this.

We worked with the Treasury to find a proportionate response to potential tax avoidance, resisting draconian rules that would have penalised innocent members and been very difficult for schemes to implement.

We also succeeded in making it easier for defined benefit schemes to know whether members are under the £30,000 transfer advice limit. However, there is still a lot we do not know for certain.

Last October the NAPF presented 101 ‘Known Unknowns’ about the reforms to the House of Commons committee on the pensions schemes bill.

Since then there has been progress but schemes still do not have the full and final answers to many of these questions, and recent announcements mean more keep being added.

An example is the ‘second line of defence’, or ‘retirement risk warnings’. This is the requirement for schemes and providers to ask questions about the circumstances that relate to an individual’s decision to access cash from their pension, and to give relevant risk warnings in response to answers from the consumer.

We have been told that guidance will be published in April, and as yet there is no detail on how it will work, what questions should be posed, what risk warnings given and what records kept.

We will keep pressing government to publish the final rules as soon as possible. We must not forget that April 6 is only the beginning.

It is important the pensions sector looks beyond this milestone to the flexible new world beyond, but our first priority must be to ensure schemes stand a fighting chance of implementing the reforms in time.

We’ve said it before but we’ll say it again – the clock is ticking.

Graham Vidler is director of external affairs at the NAPF