The People’s Pension is calling on the government to extend the new targeted support framework to trust-based schemes, overseen by the Pensions Regulator, to avoid people missing out on help simply because of the type of pension scheme they are in. 

 

 

 

The £45bn master trust said a specific framework would allow trust-based pension savers to access equivalent support and protections to those available through contract-based schemes regulated by the Financial Conduct Authority, “while recognising trustees’ different legal and fiduciary responsibilities”. 

 

People’s said targeted support could make a significant difference at key points throughout a saver’s pension journey, but believes the fact it can only be provided by FCA-authorised firms could mean savers getting “very different levels of help when making the same retirement decisions”. 

  

It said the absence of a separate legal and regulatory framework “creates additional complexity and risk” for trust-based schemes and “a strong compliance and cultural barrier to trustees offering support that could be perceived as advice”.  

  

“We cannot end up with a two-tier system where the vast majority [of] workplace pension savers miss out on targeted support simply because their employer chose a master trust rather than a group personal pension,” said the fund’s chief commercial officer, David Meliveo.  

  

“We want to be able to offer People’s Pension members the same kind of targeted support that contract-based providers are now developing. Government has an opportunity to create a level playing field that allows trust-based schemes to do that safely, so the type of pension someone’s employer chose does not dictate the quality of help they get,” Meliveo added. 

 

The FCA regime has been operating since April this year. Some trustees believe there is an opportunity to team up with authorised firms.  

Trustee firm Pi Partnership argued that although targeted support is aimed mainly at contract-based schemes, “trustees should not assume this is out of scope”. This is because “in practice, schemes could look to partner with an FCA‑regulated firm to provide support akin to targeted support to their members for specific scenarios, rather than directly by trustees, making provider readiness a key consideration regardless of scheme type”. 

Trust-based schemes will soon be obliged to offer guided retirement to their members, a different framework that has a a similar aim of improving outcomes and offering greater help to scheme members. Law firm Burges Salmon said last year that the FCA sees targeted support and guided retirement “as a two-pronged approach to (1) bridging the advice gap among those approaching retirement and (2) offering a safety net for those at retirement and who have not engaged to date”. 

With the FCA itself having been keen to understand how trustees would want to support their members, the lawyers noted that “reading between the lines, it seems the FCA is concerned that savers might face an inconsistent experience across different types of pensions – receiving targeted support in respect of some pensions but not others”. 

However, the FCA is seemingly aware that trustees will not want to stray into targeted support territory without authorisation. This has led it to state previously that “support that relates solely to ‘in-scheme’ occupational pension scheme investments will generally not involve trustees carrying out regulated activities without being authorised (or exempt)”.