The chancellor's 2014 Budget in March sparked off a year of almost unprecedented change in pensions, seeing an immediate response from some employers on providing retirement flexibility.
The reforms hit an annuities market already damaged by a damning FCA report and sparked debate around how scheme design and investment strategy should reflect the new freedoms.
We have selected five of our best case studies from the year to demonstrate how schemes are planning to deal with the approaching reform.
SME 'genuinely worried' about Budget impact on engagement
May 12
Many small and medium-sized employers perpared for auto-enrolment this year amid concerns of a 'capacity crunch' for these companies seeking AE services. Another employer claimed the process was a "doddle", contradicting industry expectation.
However, Tricia Collins, group company secretary at manufacturer James Walker Group, raised concerns that the increased complexity of pension freedom would alienate members and affect auto-enrolment.
Collins said: "I'm genuinely worried. Between employers and the pensions industry we have to do more to help them."
The employer used a nationwide roadshow to gauge member understanding. It found many members did not understand pensions or annuities and did not understand the risks they were taking.
Collins said people with a limited understanding of pensions would not comprehend the newly increased range of options available.
The employer invested two years of research into auto-enrolment and saw it as an opportunity to standardise its pensions offering, Collins said.
Kingfisher reviews its DC set-up to meet newfound flexibilities
June 18
The Kingfisher Pension Scheme also reviewed its default fund, we reported in June, to ensure it allowed members to make the most of the retirement flexibility.
Matt Fuller, investment manager at the Kingfisher Pension Scheme, said: "We need to factor those changes into our thinking, recognising that fewer people will purchase annuities. At the top end they may prefer to consider drawdown, and at the lower end more will be able to take 100 per cent cash if they wish to do so."
The challenge faced by many schemes is deciding which of the new at-retirement options their members are most likely to want. Fuller said that understanding what members would want while allowing them to choose any of the options was at the heart of deciding the structure of the default.
How Nest will respond to Budget changes
June 25
The Budget announcement sparked a flurry of consultation over the implications of the changes. These concerned a number of areas such as defined benefit and defined contribution transfers and the tax structure of the reformed pension system
The UK's largest mastertrust reviewed its DC investment strategy launched a consultation of its own on how to respond to the reforms.
It also conducted comprehensive research for the consultation document, encompassing areas such as behavioural economics and how members may interact with the changes
Chief investment officer Mark Fawcett said: "The key thing to remember about Nest is we are a very young scheme, so pot size is currently extremely small on average.
"This gives us time to think about how we should evolve the investment strategy for when people start having larger pots and want to take advantage of that flexibility."
How JPMorgan and RBS give DC members retirement flexibility
June 20
As the industry tried to come to terms with the effect the reforms would have on how they prepare members for retirement, drawdown was increasingly mentioned as a method through which members would be allowed to access their pots.
We reported in June that the JPMorgan UK Pension Plan would use an automated drawdown option as a way to mitigate factors such as increasing longevity, uncertain retirement ages and uncompetitive annuities.
Rene Poisson, chair of the JPMorgan Pension Plan, said: "The employer would pay the set-up cost of going into this structure in the same way as they do going into the annuity, but then the member would be responsible for paying the annual ongoing admin charges, so there would be no incremental cost to the employer in doing this."
The £2.2bn DC plan currently contacts members five years before retirement with the option to remain fully invested in a blend of diversified growth funds; or they can remain invested until 18 months prior to retirement, at which point 25 per cent of their pot is converted into cash for a lump sum.
M&S weighs drawdown option for mastertrust members
December 12
This month, we reported retailer Marks & Spencer was also considering offering a drawdown option for members of its DC scheme.
Julie Parker-Welch, pensions strategy specialist at M&S, told the Westminster Employment forum drawdown would likely be the scheme's default option at retirement.
The M&S plan is a mastertrust run by Legal and General. Members can give a 3-5 per cent contribution to receive 6 per cent from their employer, or 6 per cent and upwards to receive 12 per cent.
Legal and general is currently looking at ways to allow members to take income from the scheme. Parker-Welch said drawdown could potentially be easy to implement through the mastertrust.
A recent survey by corporate benefits adviser Wealth at Work found 45 per cent of employers intend to have the resources in place to provide the new pension flexibilities.
