Income Drawdown: Is your pension fund meeting your obligations to members?

Prior to the 2015/2016 tax year (when ‘pension freedoms’ changes became active), it had been routine for members to wait until reaching a fixed retirement date before accepting one of two options; a tax-free lump sum and the remainder used to purchase an annuity, or just to purchase an annuity. The pension freedom changes brought in new options to allow funds to remain invested with the ability to take regular or ad-hoc drawdown payments.  There was no longer the requirement to simply purchase an annuity. Post-pension freedoms, members have the flexibility to choose exactly how they would like to receive their income. However, the onus should be placed on trustees to incorporate a valued retirement product in their defined contribution (DC) offering. This, however, is not always the case.   Testing the market BlueSky have surveyed a range of trustees and schemes to see what is being offered to members.  The results suggest that DC schemes in general are still leaving the responsibility to the member to go to the open market and buy an annuity.  Often this choice is being made by default, with members not aware of the choices they now have. Income drawdown effectively allows you to treat your pension pot like a bank account, offering the ability to fund your retirement in a number of ways. You can invest your pension savings to generate a regular income and withdraw lump sums as required.  Often this approach might be a more desirable outcome than the purchase of an annuity, fixing the income payments for the life of the individual. The results of our survey show that... read more

What is a Master Trust?

The Pension Schemes 2017 Act introduces a formal definition of a ‘master trust’. Master trusts were greeted with mixed emotion into the pensions club five years ago but are now the backbone of defined contribution (DC) scheme provision. As of today, a master trust is defined as an occupational pension scheme that: • Provides money purchase benefits • Is used by more than 1 employer • Is not only used by connected employers • Is not a public service scheme Master trusts must also pass independent assurance that they are aligned with the standards set out in the DC code. It could be argued that it would be a good thing for members if all occupational pension schemes were assured against the same set of standards, and many in the industry have been calling for exactly this. If it were implemented, this would effectively get rid of the different divisions of DC pension scheme provision. It is now not long until we discover the much-awaited input from the regulators on the future of master trusts. BlueSky certainly believes that a level playing field for all pensions providers is the only sensible approach to ensure that members receive the best from their schemes, regardless of the provider. We will see what the regulators think. CEO of BlueSky, Paul Bannister, discusses the issue, and the future plans for BlueSky. By using a master trust, employers can cut pension administration costs, increase governance, and provide more flexible benefits options for members. A report by showed that two thirds of individuals are automatically enrolled in master trusts in the UK thus showing... read more

75bps: Should the charge cap remain?

The Government’s introduction of workplace pensions to the market was intended not only to solve the issue of fewer companies offering lifelong pension schemes, but to tackle the troubling lack of saving habits among younger savers and those who move jobs regularly. With costs and charges having a significant impact on how much of a saver’s pension pot they end up taking home, there has understandably been much concern surrounding a suggested introduction of higher charges for some workplace pensions. As a result, a basis point cap of 75 (0.75%) was introduced in April of this year, for those who were auto-enrolled into a qualifying workplace pension scheme. The charge cap intends to restrict the fees that members can be charged in a default scheme to 75bps. Yet with concerning discussion arising surrounding a possible review of this charge cap, it is important to consider value for money and member outcomes, as well as a number of wider implications, from pricing trends and sustainability to competition at all levels across the board. Could a reduction in the price cap lead to a small number of providers, all offering the same? Having the ability to provide innovation requires investment in products. With the auto enrolment process coming to an end and employers having ticked the regulatory box, determining their decision on a provider by cost, amongst other parameters, it is important to consider whether these products offer enough variety. How can BlueSky assist? At BlueSky we provide exceptional pension scheme products, TBPS and Crystal, within the 75bps charge cap. A reduction in this cap would undoubtedly result in a market... read more

Pension Scheme Guidance or Advice?

Since George Osborne’s announcement of changes to the Budget, Financial Guidance has become a buzzword circulating throughout the Pensions industry. Government and regulators have since been working closely together to clarify the distinction between pension advice and pension guidance, and as we progress through 2017, we can only expect to see this ‘buzzword’ becoming a greater feature. But what is financial advice, and when is Pension Scheme Guidance advice?

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Cybersecurity: Keeping your Pension Scheme safe

No matter the size of the organisation, without the correct security protocols in place, anybody is vulnerable to an attack. Ransomware must be taken seriously by each and every organisation, with those most at risk from an attack being the day to day users themselves; your staff.
So how do we at BlueSky ensure that we, and our clients’ data, are protected from such cyber-attacks?

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