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COBS 19.1 Pension transfers, conversions, and opt-outs5

Application

COBS 19.1.-1 (1) R RP
  1. (1)

    5This section applies to a firm that gives advice or a personal recommendation about a pension transfer, a pension conversion or a pension opt-out.

  2. (2)

    This section does not apply to a firm that gives advice or a personal recommendation in relation to:

    1. (a)

      a pension transfer, pension conversion or pension opt-out in relation to which the only safeguarded benefit is a guaranteed annuity rate;

    2. (b)

      a pension transfer in which the retail client proposes to transfer out of a defined contribution occupational pension scheme where that client has no safeguarded benefits under that scheme.

Preparing and providing a transfer analysis

COBS 19.1.1 R RP

1If an individual who is not a pension transfer specialist gives advice or 5a personal recommendation about a pension transfer, a pension conversion5 or pension opt-out on a firm's behalf, the firm must ensure that the recommendation or advice 5 is checked by a pension transfer specialist.

COBS 19.1.2 R RP

A firm must:

  1. (1)

    compare the benefits likely (on reasonable assumptions) to be paid under a defined benefits pension scheme or other pension scheme with safeguarded benefits5with the benefits afforded by a personal pension scheme, 5stakeholder pension scheme or other pension scheme with flexible benefits5, before it advises a retail client to transfer out of a defined benefits pension schemeor other pension scheme with safeguarded benefits5;

  2. (2)

    ensure that that comparison includes enough information for the client to be able to make an informed decision;

  3. (3)

    give the client a copy of the comparison, drawing the client's attention to the factors that do and do not support the firm's advice, in good time, and in any case 5no later than when the key features document is provided; and

  4. (4)

    take reasonable steps to ensure that the client understands the firm's comparison and its advice.

COBS 19.1.2A R RP

5A firm need not carry out the comparison described in COBS 19.1.2R if:

  1. (1)

    the retail client wishes to crystallise benefits immediately after the pension transfer or pension conversion; and

  2. (2)

    the retail client is at normal retirement age under the rules of the ceding scheme.

COBS 19.1.3 G RP

In particular, the comparison should:

  1. (1)

    take into account all of the retail client's relevant circumstances;

  2. (2)

    have regard to the benefits and options available under the ceding scheme and the effect of replacing them with the benefits and options under the proposed scheme;

    3
  3. (3)

    explain the assumptions on which it is based and the rates of return that would have to be achieved to replicate the benefits being given up;

    35
  4. (4)

    be illustrated on rates of return which take into account the likely expected returns of the assets in which the retail client's funds will be invested; and5

    35
  5. (5)

    where an immediate crystallisation of benefits is sought by the retail client prior to the ceding scheme’s normal retirement age, compare the benefits available from crystallisation at normal retirement age under that scheme.5

COBS 19.1.4 R RP

When a firm compares the benefits likely to be paid under a defined benefits pension scheme or other pension scheme with safeguarded benefits5with the benefits afforded by a personal pension scheme, 5stakeholder pension scheme or other pension scheme with flexible benefits5 (COBS 19.1.2R (1)), it must:

5
  1. (1)

    assume that:

    (a) the annuity interest rate is the intermediate rate of return appropriate for a level or fixed rate of increase annuity in 2COBS 13 Annex 2 3.1R(6)2 unless COBS 19.1.4B R applies3 or the rate for annuities in payment (if less);3

    44

    (b) the RPI4 is

    4

    2.5%

    (c) the average earnings index and the rate for section 21 orders is

    4.0%

    (d) for benefits linked to the RPI,4 the pre-retirement limited price indexation revaluation is

    2.5%

    (e) the annuity interest4 rate for3 post-retirement limited price indexation based on the RPI4 with maximum pension4 increases less than or equal to 3.5% or with minimum pension4 increases more than or equal to 3.5% is the rate in (a) above allowing for increases at the maximum rate of pension increase4; otherwise it is the rate in (f) below;3

    43
    3

    (f) the index linked annuity interest4 rate for pension benefits linked to the RPI4 is the intermediate rate of return in 2COBS 13 Annex 2 3.1 R (6)2 for annuities linked to the RPI4 unless COBS 19.1.4B R applies;3

    44

    (g) the mortality rate used to determine the annuity is based on the year of birth rate derived from each of the Institute and Faculty of Actuaries’ Continuous Mortality Investigation tables PMA086 and PFA086 and including mortality improvements derived from each of the male and female annual mortality projections models, in equal parts;3

    4

    4(h) for benefits linked to the CPI, the pre-retirement limited price indexation revaluation is

    2.0%

    4(i) the index linked annuity interest rate for pension benefits linked to the CPI is the intermediate rate of return in COBS 13 Annex 2 3.1R(6) for annuities linked to the RPI plus 0.5% unless COBS 19.1.4B R applies in which case it is the annuity rate in COBS 19.1.4B R plus 0.5%;

    4(j) the annuity interest rate for post-retirement limited price indexation based on the CPI with maximum pension increases less than or equal to 3.0% or with minimum pension increases more than or equal to 3.5% is the rate in (a) above allowing for increases at the maximum rate of pension increase; where minimum pension increases are more than or equal to 3% but less than 3.5% the annuity rate is the rate in (a) above allowing for increases at the minimum rate of pension increase otherwise it is the rate in (i) above;

    or use more cautious assumptions;

  2. (2)

    calculate the interest rate in deferment; and

  3. (3)

    have regard to benefits which commence at difference times.

COBS 19.1.4A E RP

3For any year commencing 6 April, the use of the male and female annual CMI Mortality Projections Models in the series CMI(20YY-2_M_[1.25%]6 and CMI(20YY-2_F_[1.25%]6, where YY-26 is the year of the Model used, will tend to show compliance with COBS 19.1.4R (1)(g).

COBS 19.1.4B R RP

3 Firms must apply the annual provisions at COBS 13 Annex 2 3.1R(6) on a monthly basis in any month where the yields on the 15th of the relevant month would give a rolling 12 month average annuity rate that varies by at least 0.2% from the previous rate.

COBS 19.1.5 R RP

If a firm arranges a pension transfer or pension opt-out for a retail client as an execution-only transaction, the firm must make, and retain indefinitely, a clear record of the fact that no personal recommendation was given to that client.

Suitability

COBS 19.1.6 G RP

When advising a retail client who is, or is eligible to be, a member of a defined benefits occupational pension scheme or other scheme with safeguarded benefits5whether to transfer, convert 5 or opt-out, a firm should start by assuming that a transfer, conversion 5 or opt-out will not be suitable. A firm should only then consider a transfer, conversion 5 or opt-out to be suitable if it can clearly demonstrate, on contemporary evidence, that the transfer, conversion 5 or opt-out is in the client's best interests.

COBS 19.1.7 G RP

When a firm advises a retail client on a pension transfer, pension conversion5 or pension opt-out, it should consider the client’s attitude to risk including, where relevant, 5in relation to the rate of investment growth that would have to be achieved to replicate the benefits being given up.

COBS 19.1.7A G RP

3When giving a personal recommendation about a pension transfer or pension conversion, 5a firm should clearly inform the retail client about the loss of the safeguarded benefits5 and the consequent transfer of risk from the defined benefits pension scheme or other scheme with safeguarded benefits5to the retail client, including:

5 5
  1. (1)

    the extent to which benefits may fall short of replicating those in the defined benefits pension scheme or other scheme with safeguarded benefits5;

  2. (2)

    the uncertainty of the level of benefit that can be obtained from the purchase of a future annuity and the prior investment risk to which the retail client is exposed until an annuity is purchased with the proceeds of the proposed personal pension scheme or stakeholder pension scheme; and

  3. (3)

    the potential lack of availability of annuity types (for instance, annuity increases linked to different indices) to replicate the benefits being given up in the defined benefits pension scheme.

COBS 19.1.7B G RP

3In considering whether to make a personal recommendation, a firm should not regard a rate of return which may replicate the benefits being given up from the defined benefits pension scheme or other scheme with safeguarded benefits5as sufficient in itself.

COBS 19.1.8 G RP

When a firm prepares a suitability report it should include:

  1. (1)

    a summary of the advantages and disadvantages of its personal recommendation;

  2. (2)

    an analysis of the financial implications (if the recommendation is to opt-out); and

  3. (3)

    a summary of any other material information.

COBS 19.1.9 G RP

If a firm proposes to advise a retail client not to proceed with a pension transfer, pension conversion5 or pension opt-out, it should give that advice in writing.

COBS 19.1.10 G RP

5Where a firm has advised a retail client in relation to a pension transfer, pension conversion or pension opt-out, and the firm is asked to confirm this for the purposes of section 48 of the Pension Schemes Act 2015, then the firm should provide such confirmation as soon as reasonably practicable.

COBS 19.2 Personal pensions, FSAVCs and AVCs

Financial promotions

COBS 19.2.1 G RP

A financial promotion for1 a 1FSAVC should contain a prominent warning that, as an alternative1 an AVC arrangement 1exists, and that details can be obtained from the scheme administrator (if that is the case).1

Suitability

COBS 19.2.2 R RP

When a firm prepares a suitability report it must:

  1. (1)

    (in the case of a personal pension scheme), explain why it considers the personal pension scheme to be at least as suitable as a stakeholder pension scheme; and

  2. (2)

    (in the case of a personal pension scheme, stakeholder pension scheme or2FSAVC) explain why it considers the personal pension scheme, stakeholder pension scheme or2FSAVC to be at least as suitable as any facility to make additional contributions to an occupational pension scheme, group personal pension scheme or group stakeholder pension scheme23 which is available to the retail client.

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COBS 19.2.3 R RP

When a firm promotes a personal pension scheme, including a group personal pension scheme, to a group of employees it must:

  1. (1)

    be satisfied on reasonable grounds that the scheme is likely to be at least as suitable for the majority of the employees as a stakeholder pension scheme; and

  2. (2)

    record why it thinks the promotion is justified.

Attachment (or earmarking) orders

COBS 19.2.4 G RP

4A firm should take into account the existence of any attachment (or earmarking) orders in respect of a client’spersonal pension scheme or stakeholder pension scheme.

COBS 19.2.5 G RP
  1. (1)

    4An operator should ensure that it is aware of, and acts fully in accordance with, any attachment or earmarking orders made in respect of any members of that scheme by a court.

  2. (2)

    In particular, an operator should be mindful of its obligations under an attachment order to give notices to other parties, including transferee operators and relevant former spouses, where relevant events occur, such as transfers and significant reductions in benefits.

  3. (3)

    A firm, when advising a client in relation to a personal pension scheme or stakeholder pension scheme, or in relation to a pension transfer or pension conversion, should enquire as to whether an attachment order exists and take it into account accordingly.

COBS 19.3 Product disclosure to members of occupational pension schemes

COBS 19.3.1 R RP
  1. (1)

    When a firm sells, personally recommends or arranges1 the payment of an AVC contribution by a member of an occupational pension scheme to be secured by a packaged product purchased by the scheme trustees, it must give the trustees sufficient information to pass to the relevant member for that member to be able to make informed comparisons between the AVC and any alternative personal pension schemes and stakeholder pension schemes available.1

  2. (2)

    This rule applies to an AVC where members' benefits are linked to the earmarked segments of a life policy or scheme, but it does not apply to an AVC where the trustees make pooled investments and have their own arrangements for allocating investment returns to determine members' AVC benefits.

COBS 19.4 Open market options

Definitions3

COBS 19.4.1 R RP

4In this section:

  1. (1)

    'fact sheet' means the Money Advice Service fact sheet "Your pension: it's time to choose" available on www.moneyadviceservice.org.uk or a statement provided by a firm that gives materially the same information;

  2. (2)

    'intended retirement date' means:

    1. (a)

      the date (according to the most recent recorded information available to the provider) when the scheme member intends to retire, or to bring the benefits in the scheme into payment, whichever is the earlier; or

    2. (b)

      if there is no such date, the scheme member's state pension age;

  3. (3)

    'open market options' means the options available to a scheme member to access their pension savings on the open market;

  4. (4)

    'open market options statement' means the information specified in COBS 19.4.6R, provided in a durable medium, to assist the retail client to make an informed decision about their open market options;

  5. (5)

    'pension decumulation product' is a product used to access pension savings and includes:

    1. (a)

      a facility to enable a retail client to make an uncrystallised funds pension lump sum payment;

    2. (b)

      an option to take a small lump sum payment;

    3. (c)

      a drawdown pension; and

    4. (d)

      a pension annuity;

  6. (6)

    'pension savings' is the proceeds of the retail client'spersonal pension scheme, stakeholder pension scheme, FSAVC, retirement annuity contract or pension buy-out contract;

  7. (7)

    'reminder' is the requirement in COBS 19.4.9R to remind the retail client about the open market options statement; and

  8. (8)

    'signpost' is the requirement in COBS 19.4.16R to provide a written or oral statement encouraging a retail client to use pensions guidance or to take regulated advice to understand their options at retirement.

Application 3

COBS 19.4.2 R RP
COBS 19.4.3 G RP

4This section specifies the circumstances where a firm must:

  1. (1)

    provide a retail client with an open market options statement;

  2. (2)

    signpost pensions guidance;

  3. (3)

    provide information to enable a retail client to make an informed decision about how to access their pension savings at their intended retirement date and beyond; and

  4. (4)

    remind a retail client about their open market options.

Purpose

COBS 19.4.4 G RP

4The purpose of this section is to ensure that firms provide retail clients with timely, relevant and adequate information:

  1. (1)

    to enable them to make an informed decision about their options for accessing pension savings at their intended retirement date and beyond; and

  2. (2)

    to encourage them to shop around.

Open market options statement

When?

COBS 19.4.5 R RP
  1. (1)

    4A firm must give a retail client an open market options statement:

    1. (a)

      if the client asks a firm for a retirement quotation more than four months before the client’s intended retirement date;

    2. (b)

      if a firm does not receive such a request for a retirement quotation, between four and six months before the client’s intended retirement date; or

    3. (c)

      if a retail client with open market options tells a firm that he or she is considering, or has decided:

      1. (i)

        to discontinue an income withdrawal arrangement; or

      2. (ii)

        to take a further sum of money from his or her pension to exercise open market options;

      unless the firm has given the client such a statement in the last 12 months.

  2. (2)

    If after taking reasonable steps to comply with the requirement in COBS 19.4.5R (1) (b) a firm has been unable to provide a retail client with an open market options statement the firm must provide the statement in good time before it sells a pension decumulation product to the client.

Contents

COBS 19.4.6 R RP

4An open market options statement must include:

  1. (1)

    the Money Advice Service fact sheet "Your pension: it's time to choose" available on www.moneyadviceservice.org.uk or a statement provided by a firm that gives materially the same information;

  2. (2)

    a summary of the retail client's open market options, which is sufficient for the client to be able to make an informed decision about whether to exercise, or to decline to exercise, open market options;

  3. (3)

    information about the retail client'spersonal pension scheme, stakeholder pension scheme, FSAVC, retirement annuity contract or pension buy-out contract provided by the firm, including:

    1. (a)

      the sum of money that will be available to exercise open market options;

    2. (b)

      whether any guarantees apply and, if so, information about how the guarantees work;

    3. (c)

      any other relevant special features, restrictions, or conditions that apply, such as (for with-profits funds) any market value reduction conditions in place; and

    4. (d)

      any other information relevant to the exercise of the retail client's open market options; and

  4. (4)

    a clear and prominent statement about the availability of the pensions guidance including:

    1. (a)

      how to access the pensions guidance and its contact details;

    2. (b)

      that pensions guidance can be accessed on the internet, telephone, or face to face;

    3. (c)

      that the pensions guidance is a free impartial service to help consumers to understand their options at retirement; and

    4. (d)

      a recommendation that the client seeks appropriate guidance or advice to understand their options at retirement.

COBS 19.4.7 G RP

4For the purpose of COBS 19.4.6R(1) where a firm provides its own statement as the fact sheet, it should include materially the same information in the Money Advice Service fact sheet about:

  1. (1)

    the following options for accessing pensions savings, even if they are not offered by the firm:

    1. (a)

      pension annuity;

    2. (b)

      drawdown pension; and

    3. (c)

      uncrystallised funds pension lump sum payments;

  2. (2)

    the main features, benefits and risk factors relevant to the options for accessing pensions savings, such as:

    1. (a)

      tax implications;

    2. (b)

      what happens in the event of the client’s death;

    3. (c)

      the loss of any guarantees;

    4. (d)

      the client’s state of health;

    5. (e)

      the client’s lifestyle choices;

    6. (f)

      whether the client is married or has dependants; and

    7. (g)

      sustainability of income over time;

  3. (3)

    how to access financial advice and information about the different ways in which the client might be able to access their pension savings;

  4. (4)

    the availability of free, impartial guidance from the pensions guidance; and

  5. (5)

    the client’s option to shop around, with an explanation of how they may do so.

COBS 19.4.8 R RP

4An open market options statement must not include an application form for a pension decumulation product.

Reminder

COBS 19.4.9 R RP

4At least six weeks before the retail client’s intended retirement date the firm must:

  1. (1)

    remind the client about the open market options statement;

  2. (2)

    tell the client what sum of money will be available to exercise open market options;

  3. (3)

    remind the client about the availability of the pensions guidance; and

  4. (4)

    recommend that the client seeks appropriate guidance or advice to understand their options at retirement.

COBS 19.4.10 R RP

4The reminder must not include an application form for a pension decumulation product.

Key features illustrations

COBS 19.4.11 R RP

4A firm must not provide a key features illustration to a retail client for a pension decumulation product, excluding a small lump sum payment, unless:

  1. (1)

    it is required to provide the client with the key features illustration in accordance with the rules on providing product information to clients (COBS 14.2.1R);

  2. (2)

    without prompting by the firm, the client requests the key features illustration;

  3. (3)

    it includes a key features illustration for each of the pension decumulation product options that it offers; or

  4. (4)

    it includes multiple key features illustrations as indicative representations of each of the pension decumulation product options that it offers.

Communications about annuity options

COBS 19.4.12 R RP

4When a firm communicates with a retail client about their pension annuity options the firm must provide the client with information about how their circumstances can affect retirement income calculations and payments for pension annuities offered by the firm and on the open market.

COBS 19.4.13 G RP

4For the purpose of COBS 19.4.12R, examples of the circumstances which can affect retirement income calculations and payments include:

  1. (1)

    the client’s marital status;

  2. (2)

    whether the client has dependants;

  3. (3)

    whether the pension annuity provides a fixed, increasing or decreasing income;

  4. (4)

    the certainty of income associated with an annuity;

  5. (5)

    the client’s state of health; and

  6. (6)

    the client’s lifestyle choices.

Communications about drawdown and uncrystallised funds pension lump sum options

COBS 19.4.14 R RP

4When a firm communicates with a retail client about their drawdown pension and uncrystallised funds pension lump sum options, the firm must provide the client with such information as is necessary for the client to make an informed decision including, where relevant, information about:

  1. (1)

    how the remaining fund is invested;

  2. (2)

    sustainability of income over time including;

    1. (a)

      the extent to which any income is guaranteed; and

    2. (b)

      implications of full encashment on the client’s retirement income;

  3. (3)

    the need to review, make further decisions about, or take further actions during the life of the pension decumulation product;

  4. (4)

    impact on means-tested benefits;

  5. (5)

    the effect of costs and charges on the client’s income; and

  6. (6)

    tax implications.

Communications about options to access pension savings

COBS 19.4.15 G RP

4A firm should ensure that when it makes any communication with a retail client concerned with the client’s options to access their pension savings it has regard to the fair, clear and not misleading rule, the client’s best interests rule and Principles 6 and 7. In particular a firm should:

  1. (1)

    refer to the contents of the Money Advice Service fact sheet to identify what information might assist the client to understand their options;

  2. (2)

    consider whether it needs to include or refer to any information contained in the Money Advice Service fact sheet;

  3. (3)

    ensure that the content, presentation or layout of any pension decumulation product information does not emphasise any potential benefits of the firm’s own products and services in a way that disguises, diminishes or obscures important information or messages contained in the fact sheet;

  4. (4)

    prominently highlight the ability to shop around and state clearly that other providers might offer pension decumulation products that are more appropriate for the client’s needs and circumstances and may offer a higher level of retirement income;

  5. (5)

    present information in a logical order, using clear and descriptive headings and where appropriate cross-references and sub-headings to aid navigation; and

  6. (6)

    where possible, use plain language and avoid the use of jargon, unfamiliar or technical language or, where this is not possible, provide easily accessible accompanying explanations in plain language.

Signposting pensions guidance

COBS 19.4.16 R RP
  1. (1)

    4When a firm communicates with a retail client about the retail client'spersonal pension scheme, stakeholder pension scheme, FSAVC, retirement annuity contract or pension buy-out contract which is provided by the firm, unless the circumstances in (2) apply, the firm must:

    1. (a)

      refer to the availability of the pensions guidance;

    2. (b)

      offer to provide the client with information about how to access the pensions guidance; and

    3. (c)

      include a recommendation that the client seeks appropriate guidance or advice to understand their options at retirement.

  2. (2)

    A firm is not required to provide the client with the statement required in (1) where:

    1. (a)

      the firm communicates with the client for a purpose other than:

      1. (i)

        encouraging the client to think about their open market options; or

      2. (ii)

        facilitating access to the client's pension savings; or

    2. (b)

      the client has already accessed the pensions guidance; or

    3. (c)

      the client has already received advice from a firm on their open market options, for example from an independent financial adviser; or

    4. (d)

      the firm is providing the client with an open market options statement or six-week reminder in accordance with COBS 19.4.5R or COBS 19.4.9R.

COBS 19.4.17 G RP

4An example of behaviour by or on behalf of a firm that is likely to contravene the client's best interests rule or Principle 6 and may contravene other Principles is for a firm to actively discourage a retail client from using the pensions guidance, for example by:

  1. (1)

    leading the client to believe that using the pensions guidance is unnecessary or would not be beneficial; or

  2. (2)

    obscuring the statement about the availability of the pensions guidance or any other information relevant to the exercise of open market options.

Tax implications

COBS 19.4.18 R RP

4If a firm receives an application from a retail client to access some or all of their pension savings, the firm must provide the client with a description of the tax implications before the client accesses their pension savings.

COBS 19.4.19 R RP

4A firm is not required to provide the information in COBS 19.4.18R where it is provided in accordance with COBS 14.2.1R.

COBS 19.5 1Independent governance committees (IGCs)

Application

COBS 19.5.1 R RP

This section applies to a firm which operates a relevant scheme in which there are at least two relevant policyholders.

Requirement to establish an IGC

COBS 19.5.2 R RP
  1. (1)

    Subject to COBS 19.5.3 R, a firm must establish an IGC.

  2. (2)

    This rule does not apply to a firm ('Firm A') if another firm in Firm A's group has made arrangements under this section for an IGC to cover relevant schemes operated by Firm A.

Governance advisory arrangements

COBS 19.5.3 R RP
  1. (1)

    If a firm considers it appropriate, having regard to the size, nature and complexity of the relevant schemes it operates, it may establish a governance advisory arrangement instead of an IGC.

  2. (2)

    If a firm has decided to establish a governance advisory arrangement rather than an IGC, this section (other than COBS 19.5.9R (2), COBS 19.5.9R (3), COBS 19.5.10 G, COBS 19.5.11 R and COBS 19.5.12 G) apply to the firm by reading references to the IGC as references to the governance advisory arrangement.

  3. (3)

    A firm must establish a governance advisory arrangement on terms that secure the independence of the governance advisory arrangement and its Chair from the firm.

COBS 19.5.4 G RP
  1. (1)

    Firms with large or complex relevant schemes should establish an IGC. For the purposes of this section, a firm may determine whether it has large relevant schemes by reference to:

    1. (a)

      the number of relevant policyholders in relevant schemes;

    2. (b)

      the funds under management in relevant schemes; and

    3. (c)

      the number of employers contributing to relevant schemes.

  2. (2)

    Examples of features that might indicate complex schemes include:

    1. (a)

      schemes that are operated on multiple information technology systems;

    2. (b)

      schemes that have multiple charging structures;

    3. (c)

      schemes that offer a with-profits fund; and

    4. (d)

      the firm offers relevant policyholders access to investment funds it operates or which are operated by an entity with the same ownership.

Terms of reference for an IGC

COBS 19.5.5 R RP

A firm must include, as a minimum, the following requirements in its terms of reference for an IGC:

  1. (1)

    the IGC will act solely in the interests of relevant policyholders;

  2. (2)

    the IGC will assess the ongoing value for money for relevant policyholders delivered by relevant schemes particularly, though not exclusively, through assessing:

    1. (a)

      whether default investment strategies within those schemes:

      1. (i)

        are designed and executed in the interests of relevant policyholders;

      2. (ii)

        have clear statements of aims and objectives;

    2. (b)

      whether the characteristics and net performance of investment strategies are regularly reviewed by the firm to ensure alignment with the interests of relevant policyholders and that the firm takes action to make any necessary changes;

    3. (c)

      whether core scheme financial transactions are processed promptly and accurately;

    4. (d)

      the levels of charges borne by relevant policyholders; and

    5. (e)

      the direct and indirect costs incurred as a result of managing and investing, and activities in connection with the managing and investing of, the pension savings of relevant policyholders, including transaction costs;

  3. (3)

    the IGC will raise with the firm'sgoverning body any concerns it may have in relation to the value for money for relevant policyholders delivered by a relevant scheme;

  4. (4)

    the IGC will escalate concerns as appropriate where the firm has not, in the IGC's opinion, addressed those concerns satisfactorily or at all;

  5. (5)

    the IGC will meet, or otherwise make decisions to discharge its duties, using a quorum of at least three members, with the majority of the quorum being independent;

  6. (6)

    the Chair of the IGC will be responsible for the production of an annual report setting out:

    1. (a)

      the IGC's opinion on the value for money delivered by relevant schemes, particularly against the matters listed under (2);

    2. (b)

      how the IGC has considered relevant policyholders' interests;

    3. (c)

      any concerns raised by the IGC with the firm'sgoverning body and the response received to those concerns;

    4. (d)

      how the IGC has sufficient expertise, experience and independence to act in relevant policyholders' interests;

    5. (e)

      how each independent member of the IGC, together with confirmation that the IGC considers these members to be independent, has taken into account COBS 19.5.12 G;

    6. (f)

      the arrangements put in place by the firm to ensure that the views of relevant policyholders are directly represented to the IGC.

COBS 19.5.6 G RP
  1. (1)

    An IGC is expected to act in the interests of relevant policyholders both individually and collectively. Where there is the potential for conflict between individual and collective interests, the IGC should manage this conflict effectively. An IGC is not expected to deal directly with complaints from individual policyholders.

  2. (2)

    The primary focus of an IGC should be the interests of relevant policyholders. Should a firm ask an IGC to consider the interests of other members, the firm should provide additional resources and support to the IGC such that the IGC's ability to act in the interests of relevant policyholders is not compromised.

  3. (3)

    An IGC should assess whether all the investment choices available to relevant policyholders, including default options, are regularly reviewed to ensure alignment with the interests of relevant policyholders.

  4. (4)

    Where an IGC is unable to obtain from a firm, and ultimately from any other person providing relevant services, the information it requires to assess the matters in COBS 19.5.5R (2), the IGC should explain in the annual report why it has been unable to obtain the information and how it will take steps to be granted access to that information in the future.

  5. (5)

    If, having raised concerns with the firm'sgoverning body about the value for money offered to relevant policyholders by a relevant scheme, the IGC is not satisfied with the response of the firm'sgoverning body, the IGC Chair may escalate concerns to the FCA if the IGC thinks that would be appropriate. The IGC may also alert relevant policyholders and employers and make its concerns public.

  6. (6)

    The IGC Chair should raise with the firm'sgoverning body any concerns that the IGC has about the information or resources that the firm provides, or arrangements that the firm puts in place to ensure that the views of relevant policyholders are directly represented to the IGC. If the IGC is not satisfied with the response of the firm'sgoverning body, the IGC Chair may escalate its concerns to the FCA, if appropriate. The IGC may also make its concerns public.

  7. (7)

    The IGC should make public the names of those members who are employees of the provider firm, unless there are compelling reasons not to do so. The IGC should consult employee members as to whether there are such reasons.

Duties of firms in relation to an IGC

COBS 19.5.7 R RP

A firm must:

  1. (1)

    take reasonable steps to ensure that the IGC acts and continues to act in accordance with its terms of reference;

  2. (2)

    take reasonable steps to provide the IGC with all information reasonably requested by the IGC for the purposes of carrying out its role;

  3. (3)

    provide the IGC with sufficient resources as are reasonably necessary to allow it to carry out its role independently;

  4. (4)

    have arrangements to ensure that the views of relevant policyholders can be directly represented to the IGC;

  5. (5)

    take reasonable steps to address any concerns raised by the IGC under its terms of reference;

  6. (6)

    provide written reasons to the IGC as to why it has decided to depart in any material way from any advice or recommendations made by the IGC to address any concerns it has raised;

  7. (7)

    take all necessary steps to facilitate the escalation of concerns by the IGC under COBS 19.5.5R (4) and COBS 19.5.6G (5); and

  8. (8)

    make the terms of reference and the annual report of the IGC publicly available.

COBS 19.5.8 G RP
  1. (1)

    A firm should consider allocating responsibility for the management of the relationship between the firm and its IGC to a person at the firm holding an FCAsignificant-influence function.

  2. (2)

    A firm should fund independent advice for the IGC if this is necessary and proportionate.

  3. (3)

    A firm should not unreasonably withhold from the IGC information that would enable the IGC to carry out a comprehensive assessment of value for money.

  4. (4)

    A firm should have arrangements for sharing confidential and commercially sensitive information with the IGC.

  5. (5)

    A firm should use best endeavours to obtain, and should provide the IGC with, information on the costs incurred as a result of managing and investing, and activities in connection with the managing and investing of, the assets of relevant schemes, including transaction costs. Information about costs and charges more broadly should also be provided, so that the IGC can properly assess the value for money of relevant schemes and the funds held within these.

  6. (6)

    If a firm asks an IGC to take on responsibilities in addition to those in COBS 19.5.5 R, the firm should provide additional resources and support to the IGC such that its ability to act within its terms of reference in COBS 19.5.5 R is not compromised.

  7. (7)

    A firm should provide secretarial and other administrative support to the IGC. The nature of the support, including how it is provided and by whom, should not conflict with the IGC's ability to act independently of the firm.

  8. (8)

    A firm can make the terms of reference for the IGC and the annual report of the IGC publicly available by placing them on its website and by providing them on request to relevant policyholders and their employers.

Appointment of IGC members

COBS 19.5.9 R RP
  1. (1)

    A firm must take reasonable steps to ensure that the IGC has sufficient collective expertise and experience to be able to make judgements on the value for money of relevant schemes.

  2. (2)

    A firm must recruit independent IGC members through an open and transparent recruitment process.

  3. (3)

    A firm must appoint members to the IGC so that:

    1. (a)

      the IGC consists of at least five members, including an independent Chair and a majority of independent members;

    2. (b)

      IGC members are bound by appropriate contracts which reflect the terms of reference in COBS 19.5.5 R, and on such terms as to secure the independence of independent members;

    3. (c)

      independent IGC members who are individuals are appointed for fixed terms of no longer than five years, with a cumulative maximum duration of ten years;

    4. (d)

      individuals acting as the representative of an independent corporate member are appointed to the IGC for a maximum duration of ten years;

    5. (e)

      independent IGC members who are individuals, including those representing independent corporate members, are not eligible for reappointment to the IGC until five years have elapsed, after having served on the firm'sIGC for the maximum duration of ten years;

    6. (f)

      appointments to the IGC are managed to maintain continuity in terms of expertise and experience of the IGC.

COBS 19.5.10 G RP
  1. (1)

    The effect of COBS 19.5.9R (3)(b) is that employees of the firm who serve on an IGC should be subject to appropriate contractual terms so that, when acting in the capacity of an IGC member, they are free to act within the terms of reference of the IGC without conflict with other terms of their employment. In particular, when acting as an IGC member, an employee will be expected to act solely in the interests of relevant policyholders and should be able to do so without breaching any terms of his employment contract.

  2. (2)

    An individual may serve on more than one IGC.

  3. (3)

    A firm should replace any vacancies that arise within IGCs as soon as possible and, in any event, within six months.

  4. (4)

    A firm should involve the IGC Chair in the appointment and removal of other members, both independent members and employees of the firm.

  5. (5)

    A firm should consider indemnifying IGC members against any liabilities incurred while fulfilling their duties as IGC members.

IGC members who are independent

COBS 19.5.11 R RP

The firm, in appointing independent IGC members, must determine whether such a member is independent in character and judgement and whether there are relationships or circumstances which are likely to affect, or could appear to affect, that member’s judgement.

COBS 19.5.12 G RP
  1. (1)

    An IGC member is unlikely to be considered independent if any of the following circumstances exist:

    1. (a)

      the individual is an employee of the firm or of a company within the firm'sgroup or paid by them for any role other than as an IGC member, including participating in the firm's share option or performance-related pay scheme;

    2. (b)

      the individual has been an employee of the firm or of another company within the firm'sgroup within the five years preceding his appointment to the IGC;

    3. (c)

      the individual has, or had within the three years preceding his appointment, a material business relationship of any description with the firm or with another company within the firm'sgroup, either directly or indirectly.

  2. (2)

    A firm may appoint a body corporate to an IGC, including as Chair. The corporate member should notify the firm of the individual who will act as the member's representative on the IGC. A firm should consider the circumstances of a corporate IGC member and any representative of the corporate member with the objective of ensuring that any potential conflicts of interest are managed effectively so that they do not affect the corporate IGC member's ability to represent the interests of relevant policyholders.

  3. (3)

    Should the firm, or another company within the firm'sgroup, operate a mastertrust, there may be benefits in a trustee of such a mastertrust also being an IGC member. If such circumstances exist, an individual or a corporate trustee may be suitable to be an independent IGC member, notwithstanding the relationship with the firm.

  4. (4)

    A firm should review on a regular basis whether its independent IGC members continue to be independent and take appropriate action if it considers that they are not.

COBS 19.6 Restriction on charges in qualifying schemes2

Application

COBS 19.6.1 R RP

This section applies to an operator of a qualifying scheme.

COBS 19.6.2 R RP

The restrictions on administration charges in COBS 19.6.4 R do not apply in relation to a default arrangement under which, at any time before benefits come into payment, those benefits accruing to the member involve, or involve an option to have, a promise by or to be obtained from a third party about the rate or amount of those benefits.

Express agreement

COBS 19.6.3 G RP
  1. (1)

    In this section, where express agreement is required by a rule, the FCA would expect firms to take active steps to obtain the informed, active consent of the affected member(s) of the qualifying scheme, and to have that consent in writing in a durable medium, capable of being produced or reproduced when requested by the FCA.

  2. (2)

    The FCA does not consider the following to amount to express agreement (this list is not exhaustive):

    1. (a)

      a member receiving a communication stating that by becoming or continuing to be a member of the scheme, the member has agreed to a particular service;

    2. (b)

      a member being invited to click on a box to opt-out through a website link.

Default arrangements: charging structures and restrictions

COBS 19.6.4 R RP

A firm, for a default arrangement within a qualifying scheme, may only make, impose or otherwise facilitate payment of an administration charge1 by way of an accrued rights charge or a combination charge structure where:

  1. (1)

    the limits in COBS 19.6.6 R are not exceeded; or

  2. (2)

    the firm has obtained appropriate express agreement to exceed the limits and the following conditions are satisfied:

    1. (a)

      the express agreement contains an acknowledgement by the member that the administration charge1 for the service is likely to exceed the limits;

    2. (b)

      giving such express agreement is not a condition of becoming or remaining a member of the qualifying scheme;

    3. (c)

      express agreement has not been given for services which the operator must provide under the regulatory system or the general law, or which are core services.

COBS 19.6.5 G RP

The effect of COBS 19.6.4R (2)(c) is that a firm may not seek express agreement from a member to charges in excess of the limits for services which are obligatory under law, or form part of the core operation of the scheme. Such core services include, for example, designing and implementing an investment strategy, investing contributions to the scheme (to the extent that this would incur administration charges1), holding investments relating to scheme members and transferring a member’s accrued rights into or out of a default arrangement.

COBS 19.6.6 R RP

The limits on administration charges are as follows:

  1. (1)

    for a qualifying scheme which uses only an accrued rights charge, 0.75% of the value of those accrued rights;

  2. (2)

    for a qualifying scheme which uses a combination charge scheme:

    1. (a)

      for the flat-fee charge element, £25 annually;

    2. (b)

      for the contribution percentage charge element, 2.5% of the contributions annually;

    3. (c)

      for the associated accrued rights charge, the limits as set out in column 2 of the table in COBS 19.6.7 R.

COBS 19.6.7 R RP

This is the table referred to in COBS 19.6.6 R.

Contribution percentage charge rate (%)

Accrued rights charge rate (%)

1 or lower

0.6

Higher than 1 but no higher than 2

0.5

Higher than 2 but no higher than 2.5

0.4

Flat-fee charge (£)

Accrued rights charge rate (%)

10 or less

0.6

More than 10 but no more than 20

0.5

More than 20 but no more than 25

0.4

Compliance with the restrictions on charges

COBS 19.6.8 E RP
  1. (1)

    To ensure that administration charges1 are within the limits set out in COBS 19.6.6 R:

    1. (a)

      a firm should calculate the value of accrued rights in an accrued rights charge as the arithmetic mean over a 12-month period of membership of the qualifying scheme, using at least four evenly-distributed reference points over that period;

    2. (b)

      a firm should calculate the value of contributions in a contribution percentage charge over a 12-month period of membership of the qualifying scheme of a member's workplace pension contributions;

    3. (c)

      for members who have been members of the qualifying scheme for a period of less than 12 months, a firm should calculate administrative charges on a pro rata basis;

    4. (d)

      the total administration charges imposed should not exceed the relevant restriction when measured over a 12-month period. However, where the qualifying scheme has been in operation for less than 12 months, and the firm's internal processes would involve assessment of administration charges before 12 months has elapsed, then for its initial assessment, the firm may use a period of up to 18 months.

  2. (2)

    Contravention of (1) may be relied on as tending to establish contravention of COBS 19.6.4R (1) .

Prohibition of payments to third parties from qualifying schemes2

COBS 19.6.9 R RP
  1. (1)

    A firm must not make any administration charge,1 or otherwise make or facilitate any payment or provide any non-monetary benefit, in respect of any service provided by a third party in connection with a qualifying scheme which would have the effect of decreasing the value of the accrued rights of any member of that scheme.2

    2
  2. (2)

    The restriction in (1) does not apply where the firm has obtained express agreement from the relevant member to such a payment.

COBS 19.6.10 G

[deleted]2

2

Differential charges

COBS 19.6.11 R RP

2A firm must not impose greater administration charges1 on a member of a qualifying scheme whose workplace pension contributions ceased on or after 6 April 2016 than those imposed on a member for whom such contributions are still being made.

COBS 19.6.12 G RP

2The effect of COBS 19.6.11 R is to prohibit active member discounts within automatic enrolment schemes.

COBS 19.6A Restrictions on early exit charges in personal pension schemes and stakeholder pension schemes1

Application

COBS 19.6A.1 R

1This section applies to an operator of a personal pension scheme or a stakeholder pension scheme.

Purpose

COBS 19.6A.2 G

The purpose of this section is to make rules prohibiting the imposition of, and provision for, certain early exit charges on members of personal pension schemes and stakeholder pension schemes. Section 137FBB of the Act requires the FCA to make such rules.

Exclusion

COBS 19.6A.3 R

This section does not apply to any charge which is excluded from the scope of section 137FBB of the Act by the Financial Services and Markets Act 2000 (Early Exit Pensions Charges) Regulations 2016 (SI 2016/1079).

Prohibition on early exit charges on a member joining or incrementing benefits under a scheme on or after 31 March 2017

COBS 19.6A.4 R
  1. (1)

    A firm must not:

    1. (a)

      impose; or

    2. (b)

      include in the arrangements relating to a personal pension scheme or stakeholder pension scheme any provision for the imposition of:

    an early exit charge on a member of the scheme.

  2. (2)

    This rule applies in relation to a member who entered into a contract or other arrangement on or after 31 March 2017 providing for:

    1. (a)

      a right to benefits resulting from contributions to the scheme; or

    2. (b)

      an increment to benefits resulting from contributions to the scheme, but only in respect of the member’s benefits under that contract or other arrangement.

Restriction on early exit charges on a member who joined or incremented a scheme before 31 March 2017

COBS 19.6A.5 R
  1. (1)

    A firm must not impose an early exit charge on a member of a personal pension scheme or stakeholder pension scheme that exceeds the lower of:

    1. (a)

      1% of the value of the member’s benefits being taken, converted or transferred; or

    2. (b)

      such lower amount as was provided for under the scheme arrangements as at 31 March 2017; or

    3. (c)

      where no such provision was made, no charge.

  2. (2)

    A firm must not:

    1. (a)

      include provision in such a scheme for an early exit charge, where such provision did not exist on 31 March 2017; or

    2. (b)

      vary provision for an early exit charge in such a scheme to increase or potentially increase the charge.

  3. (3)

    The value of the member’s benefits in (1)(a):

    1. (a)

      is calculated at the point when the firm receives confirmation from the member of the instruction to take the action giving rise to the early exit charge;

    2. (b)

      excludes an increment to member’s benefits resulting from contributions to a scheme under a contract or other arrangement entered into by the member on or after 31 March 2017;

    3. (c)

      excludes adjustments referred to, and satisfying the conditions in Regulation 3 of the Financial Services and Markets Act 2000 (Early Exit Pensions Charges) Regulations 2016 (SI 2016/1079); and

    4. (d)

      does not exclude adjustments referred to in Regulation 4 of the Financial Services and Markets Act 2000 (Early Exit Pensions Charges) Regulations 2016 (SI 2016/1079).

  4. (4)

    This rule applies in relation to a member who entered into a contract or other arrangement (providing for a right to benefits resulting from contributions to the scheme) before 31 March 2017.

COBS 19.7 Retirement risk warnings1

Definitions

COBS 19.7.1 R RP

In this section:

  1. (1)

    [deleted]2

  2. (2)

    “pension decumulation product” is a product used to access pension savings and includes:2

    1. (a)

      a facility to enable a retail client to make an uncrystallised funds pension lump sum payment; 2

    2. (b)

      an option to take a small lump sum payment; 2

    3. (c)

      a drawdown pension; and2

    4. (d)

      a pension annuity; 2

  3. (3)

    “pension savings” is the proceeds of the client'spersonal pension scheme, stakeholder pension scheme, or occupational pension scheme;

  4. (4)

    “retirement risk warnings” are the warnings required to be given to a retail client at step 3 of the process specified in this section;

  5. (5)

    “risk factors” are the attributes, characteristics, external factors or other variables that increase the risk associated with a retail client's decision to access their pension savings using a pension decumulation product;

  6. (6)

    “signpost” is the written or oral statement encouraging a retail client to use pensions guidance or to take regulated advice to understand their options at retirement which is at step 1 of the process specified in this section.

Application

COBS 19.7.2 R RP

This section applies to a firm communicating with a retail client in relation to accessing their pension savings using a pension decumulation product.

COBS 19.7.3 R RP

This section does not apply:

  1. (1)

    to a firm giving regulated advice to a retail client on options to access their pension savings;

  2. (2)

    if the firm has already provided the retirement risk warnings to the retail client in relation to their decision to access their pension savings and the firm has reasonable grounds to believe that the retirement risk warnings are still appropriate for the client.

Purpose

COBS 19.7.4 G RP
  1. (1)

    The purpose of this section is to ensure that a firm, which is communicating with a retail client about a pension decumulation product, gives appropriate retirement risk warnings at the point when the retail client has decided how to access their pension savings.

  2. (2)

    If the retail client has not yet decided what to do,2 the firm should consider whether it is required to signpost the pensions guidance under COBS 19.4.16R2 (signposting pensions guidance) and whether it may be appropriate to provide information about the risks associated with the client’s options to access their pension savings generally2.

    2
COBS 19.7.5 G RP

This section amplifies Principles 6 and 7, but does not exhaust or restrict what they require. A firm will, in any event, need to ensure that its sales processes are consistent with the Principles and other rules.

COBS 19.7.6 G RP

An illustration of the steps a firm is required to take is set out in COBS 19 Annex 1G.

Trigger: when does a firm have to follow the steps?

COBS 19.7.7 R RP

A firm must follow the steps specified in this section at the point when the retail client has decided (in principle) to take one of the following actions (and before the action is concluded):

  1. (1)

    buy a pension decumulation product; or

  2. (2)

    vary their personal pension scheme, stakeholder pension scheme, FSAVC, retirement annuity contract or pension buy-out contract to enable the client to:

    1. (a)

      access pension savings using a drawdown pension; or

    2. (b)

      elect to make one-off, regular or ad-hoc uncrystallised funds pension lump sum payments2; or

  3. (3)

    receive a one-off, regular or ad-hoc uncrystallised funds pension lump sum payment2; or

  4. (4)

    access their pension savings using a drawdown pension; or2

  5. (5)

    withdraw the funds in full from their pension savings, reducing the value of their rights to zero.2

Step 1: determine whether the client has received guidance or regulated advice

COBS 19.7.8 R RP
  1. (1)

    The first step is to ask the retail client whether they have received pensions guidance or regulated advice:

    1. (a)

      if the client says that they have, the firm must proceed to step 2; or

    2. (b)

      if the client says that they have not or is unsure, the firm must explain that the decision to access pension savings is an important one and encourage the retail client to use pensions guidance or to take regulated advice to understand their options at retirement.

  2. (2)

    If, after giving the explanation in COBS 19.7.8R (1)(b), the retail client does not want to access pensions guidance or take regulated advice, the firm must proceed to step 2.

Step 2: identify risk factors

COBS 19.7.9 R RP

Based on how the retail client wants to access their pension savings, at step 2 the firm must ask the client questions to identify whether any risk factors are present, except where COBS 19.7.9AR applies2.

COBS 19.7.9A R RP

2If the value of the retail client’s pension savings is £10,000 or less and there are no safeguarded benefits, the firm:

  1. (1)

    is not required to ask questions to identify whether any risk factors are present; and

  2. (2)

    must prepare appropriate retirement risk warnings based on the risk factors relevant to each pension decumulation product it offers to enable retail clients to access their pension savings.

COBS 19.7.9B R RP

2A firm may ask the client the questions required by COBS 19.7.9R before the client has decided (in principle) to take one of the actions specified in COBS 19.7.7R to access their pension savings.

COBS 19.7.9C R RP

2If, to complete step 2, a firm relies on information gathered prior to the client’s decision to access their pension savings, the firm must be satisfied that this information is relevant, accurate and up-to-date before giving the risk warnings at step 3.

COBS 19.7.10 R RP

A firm must prepare the questions required by COBS 19.7.9 R before taking the steps for the first time, and must keep the questions up to date.

COBS 19.7.11 G RP

To prepare for step 2, the firm should:

  1. (1)

    identify the main risk factors relevant to each pension decumulation product it offers to enable retail clients to access their pension savings; and

  2. (2)

    prepare questions to enable it to identify the presence of those risk factors for different retail clients.

COBS 19.7.12 G RP

Examples of the sorts of risk factors which relate to pension decumulation products are:

  1. (1)

    the client's state of health;

  2. (2)

    loss of any guarantees;

  3. (3)

    whether the client has a partner or dependants;

  4. (4)

    inflation;

  5. (5)

    whether the client has shopped around;

  6. (6)

    sustainability of income in retirement;

  7. (7)

    tax implications;

  8. (8)

    charges (if a client intends to invest their pension savings);

  9. (9)

    impact on means-tested benefits;

  10. (10)

    debt; and

  11. (11)

    investment scams.

Step 3: provide appropriate retirement risk warnings

COBS 19.7.13 R RP

At step 3:2

  1. (1)

    if the value of the retail client's pension savings is £10,000 or less and there are no safeguarded benefits, based on how the retail client wants to access their pension savings, a firm must give the client the appropriate retirement risk warnings prepared under COBS 19.7.9AR(2); and 2

  2. (2)

    in all other cases, a firm must give the retail client appropriate retirement risk warnings in response to the client's answers to the firm's questions.2

COBS 19.7.14 R RP

A firm must prepare the retirement risk warnings required by COBS 19.7.13 R in good time before taking the steps for the first time, and must keep them up to date.

COBS 19.7.15 G RP

If after considering the retail client's answers it is unclear whether a risk factor is present, a firm should give the client the appropriate retirement risk warning.

Communicating the signpost and retirement risk warning

COBS 19.7.16 R RP

When communicating the signpost and retirement risk warnings, the firm must do so clearly and prominently.

COBS 19.7.17 R RP

Whatever the means of communication, the firm must ensure that the retail client cannot progress to the next stage of the sale unless the relevant signpost or retirement risk warning has been communicated to the client.

COBS 19.7.18 G RP

For an internet sale, a firm should display the required information on a screen which the retail client must access and acknowledge as part of the sales process. It would not be sufficient for the information to be accessible only by giving the client the option to click on a link or download a document.

Record keeping

COBS 19.7.19 R RP

Firms must record whether the retail client has received:

  1. (1)

    the retirement risk warnings at step 3 of the process specified in this section;

  2. (2)

    regulated advice; and

  3. (3)

    pensions guidance.

COBS 19 Annex 1 1Retirement risk warnings - steps to take

G

This annex belongs to COBS 19.7.

COBS19_Annex1_20150226

COBS 19 Annex 2 1Communications about options to access pension savings

G

This annex belongs to COBS 19.4

The definitions in COBS 19.4.1R are applied to these tables.

Table 1: Communications required to be made by the firm at specified times

Handbook reference

Matters to be communicated

Contents of communication

When

19.4.5R

Open market option statement

A statement satisfying the requirements of

1 COBS 19.4.6R , COBS 19.4.8R and COBS 19.4.10R

Trigger events specified at COBS 19.4.5R

19.4.9R

Reminder

A statement satisfying the requirements of

COBS 19.4.6R , COBS 19.4.8R and COBS 19.4.10R

At least six weeks before the client’s intended retirement date

Table 2: Requirements for other communications

Handbook reference

Subject of communication

Contents of communication

Trigger

19.4.12R

Pension annuity options

Information about how the client’s circumstances can affect pension annuity retirement income calculations and payments.

Firms may also be required to provide a key features illustration (COBS 14.2.1R) or signpost pensions guidance (COBS 19.4.16R).

Any communication with a client about their pension annuity options

19.4.14R

Drawdown pension

Relevant information about drawdown pension option.

A firm may also be required to provide a key features illustration (COBS 14.2.1R) or signpost pensions guidance (COBS 19.4.16R).

Any communication with a client about their drawdown pension options

19.4.14R

Uncrystallised funds pension lump sum

Relevant information about uncrystallised funds pension lump sum option.

Firms may also be required to provide a key features illustration (COBS 14.2.1R) or signpost pensions guidance (COBS 19.4.16R).

Any communication with a client about their uncrystallised funds pension lump sum options

19.4.15G

Communications about options to access pension savings

A firm should refer to the guidance in COBS 19.4.15G when communicating with a client about their options to access pension savings.

Firms may also be required to signpost pensions guidance (COBS 19.4.16R).

Any communication with a client about their options to access their pension savings

19.4.18R

Client applies to access pension savings

A firm must provide a description of the tax implications unless it is provided in accordance with COBS 14.2.1R.

Firms may be required to provide retirement risk warnings (COBS 19.7.7R).

Firms may also be required to signpost pensions guidance (COBS 19.4.16R).

Firm receives an application from a client to access pension savings