The Pensions Regulator

Code of practice 10
Modification of subsisting rights

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The consent route

32. The consent route as set out in this code lays out the steps to be taken by any person wishing to modify a scheme by use of the consent requirement.
33. If the modification the trustees are considering is a protected modification it can only be made if the consent requirement is satisfied.
34. If the modification is a detrimental modification which is not a protected modification, it can be made if either the consent requirement or the actuarial equivalence requirement is satisfied in respect of the affected member.
35. The consent requirement consists of:
    • the informed consent requirement (see paragraphs 36 to 40); and
    • the timing requirement (see paragraphs 48 to 50)

The informed consent requirement

37. When seeking the consent of an affected member trustees must ensure the member is provided with adequate information so that any consent given is informed consent.
38. The information must be provided in writing¹⁷ and explain clearly:
    • the nature of the proposed modification¹⁸ and the effect of the proposed modification on the member's benefits;¹⁹
    • that the member may make representations to the trustees about the proposed modification;²⁰
    • the reasonable opportunity the member has to make such representation;²¹ and
    • that the consent requirements apply in the case of the member.²²
39. The information provided to each member should include:
    • a clear explanation, where it is intended a proposed modification will be made in respect of those members who consent even if some potentially affected members do not consent, that those members who do consent will have their benefits modified and that those members who do consent may be worse off than those members who do not.
    • a clear explanation where, in the case of a detrimental modification which is not a protected modification, the intention is that the actuarial equivalence requirements will apply to those affected members who do not consent by a stated deadline, that the modification will apply to them whether they consent or not; and
    • a statement that affected members should consider whether they need to take their own independent financial advice. This should include those situations where the employer is providing some form of incentive to accept a reduction in benefits.
40. If affected members ask for clarification of the proposals, trustees should arrange for any questions about the proposals to be answered in a timely manner.
41. Trustees should consider whether it would be practicable and cost effective to provide affected members with one or more named contacts with whom they could discuss the proposed modification.

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