Explanatory note

These Regulations amend the Personal Pension Schemes (Disclosure of Information) Regulations 1987 (“the 1987 Regulations”), the Occupational Pension Schemes (Disclosure of Information) Regulations 1996 (“the 1996 Regulations”) and the Stakeholder Pension Schemes Regulations 2000 (“the 2000 Regulations”) following the amendment of section 113 of the Pension Schemes Act 1993 by section 52 of the Child Support, Pensions and Social Security Act 2000.

The effect of these amendments is that the information which has to be sent to members of schemes with money purchase benefits must include an illustration of the amount of future pension that might become payable under the scheme. The amount is to be determined by reference to guidance.

Regulation 1 provides for citation, commencement and interpretation.

Regulation 2 amends the 1987 Regulations. Paragraph (1) of regulation 2 introduces the changes made by that regulation.

Paragraph (2) of regulation 2 amends the interpretation provision of the 1987 Regulations, adding new definitions of “contracted-out employment”, “illustration date”, “non-contributing member”, “pension credit”, “the relevant guidance” and “retirement date”. The relevant guidance means the document entitled “Technical Memorandum TM1: Statutory Money Purchase Illustrations” which is prepared by the Faculty of Actuaries and the Institute of Actuaries. Copies may be obtained from the Faculty and Institute of Actuaries' website on www.actuaries.org.uk or by writing to the Institute of Actuaries, Staple Inn Hall, High Holborn, London WC1V 7QJ.

Paragraph (3)(a) of regulation 2 amends paragraph (2) of regulation 5 and provides for the requirement to furnish the information mentioned in new paragraph 2A of Schedule 2. Paragraph (3)(b) of regulation 2 inserts new paragraphs (2A) and (2B) into regulation 5. Paragraph (2A) sets out the circumstances where the requirement to furnish the information does not apply. Paragraph (2B) covers the situation where the trustees choose to furnish the information voluntarily.

Paragraph (4) of regulation 2 inserts new paragraph 2A into Schedule 2 to the 1987 Regulations. Under sub-paragraph (1) the information to be sent to the member is an illustration of the amount of the pension an entitlement to which would be likely to accrue to him, or be capable of being secured by him, at his retirement in respect of rights that may arise under the scheme. Sub-paragraph (2) describes how the amount is to be determined, with particular reference to the assumptions about contributions in sub-paragraph (3) and about annuities in sub-paragraphs (4) and (5). Sub-paragraph (6) lists the additional information which is to accompany the illustration.

Regulation 3 introduces similar requirements in relation to occupational pensions by means of amendments to regulations 1(2) and 5 of, and Schedule 2 to, the 1996 Regulations.

Regulation 4 introduces similar requirements in relation to stakeholder pensions by means of amendments to regulations 1(3) and 18 of the 2000 Regulations.

An assessment of the cost to business of complying with these Regulations has been made, copies of which have been placed in the libraries of both Houses of Parliament. Further copies may be obtained from the Department for Work and Pensions, Regulatory Impact Unit, 3rd Floor, The Adelphi, 1-11 John Adam Street, London WC2N 6HT.