28 June 2010 - Post by:Däna Burstow
Employers often ask “can I promote my pension scheme?” Their concern is that they might be giving financial advice when they are not authorised to do so by the FSA (or whichever body takes over this role – insert potential acronym of choice) – or that an employee might have the shirt off their back if the advice turns out to be wrong. However there is less to fear than you might think, both for occupational pension schemes, and, thanks to some recent changes in financial promotion rules, for group personal pensions and stakeholder plans.
Is it an occupational pension scheme?
For starters if an employer wants to promote an occupational pension scheme (normally spotted by it having trustees) then, whether it is defined benefit or defined contribution, it is not a product that the FSA has jurisdiction over so you don’t have to be FSA-authorised to promote it. You can produce booklets, newsletters, whatever you want, to your heart’s content – provided, of course, that you avoid giving individual advice and stick to providing facts about the scheme and promoting it in a general way.
In fact, sometimes you actually have to do a bit of promotion – if there are valuable options under the scheme which depend on employees taking action and which they can’t easily find out about for themselves, you need to be drawing it to their attention.
Is it a group personal pension plan or a stakeholder?
Things have just got a mite easier if your scheme is a group pension plan or a stakeholder. The employer has been able to promote its scheme for a while, but now someone else (an administrator for example) can also do so on his behalf so long as:
- the employer has a contract with any consultant which sets out how communications with staff may be made;
- the employer will not make any direct financial benefit (that’s bunce to you and me) as a result of the communication going out;
- the employer will actually pay into the scheme and tells the employee so; and
- the communication makes clear that the staff can go and get advice from someone regulated by the FSA.
Does this save me from a disappointed member?
Having said all of that, just because the FSA will not get you, does not mean that a member will not get shirty down the line. It pays to make sure that information is kept generic rather than personal and that any communications contain clear, verifiable statements of fact rather than opinion.
The question still remains in my cynical mind though – whether employers will be promoting pensions at all in short order, or whether the whole concept will have been squeezed out by the combination of loss of tax incentives at the top end, and the shift to auto-enrolment at the bottom. Will there be much left to promote?
Däna Burstow is a partner at Allen & Overy LLP.