DWP to launch call for evidence on trust-based pension protections in spring 2022

The Department for Work and Pensions (DWP) has confirmed plans to launch a call for evidence on the potential for trust-based schemes to have investment pathways and protections in place similar to contract-based schemes.

In a hearing with the Work and Pensions Committee, Pensions Minister, Guy Opperman, was questioned over the "disappointment" that The Pensions Regulator (TPR) has not made the same progress as the Financial Conduct Authority (FCA) on introducing similar protections.

In particular, members of the committee raised concerns that it could be "horribly confusing" for members who may receive differing options from different schemes at different times, without understanding why this is.

Opperman stated: “This is something we're considering, clearly the trust pensions market is different from the contract-based market and the expectations and needs of members of a trust-based scheme are different to those who pay into a contract-based scheme.

"However, our proposal in the next year is to do call for evidence on this particular issue.

"We accept that we've got to lead on it, and I suspect TPR's David Fairs was allowing us to make the case for this, because it is ultimately its a government decision.

"Clearly this is a long term-project, but particularly in the pensions space, you start policy change that has long-term consequences, and that policy change is making this whole system simpler on a long-term basis."

Opperman was unable to commit to a precise timeline for the call for evidence, although he estimated that this will likely be in "spring/April time".

Adding to this, DWP director private pensions and arm's-length bodies, Pete Searle, clarified: "The call for evidence is not just about investment pathways, that’s part of it, but it is asking what would members and schemes feel they want in this territory in a trust-based environment."

Searle also clarified that both DWP and TPR have "absolutely" been working with the FCA on investment pathways.

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