DWP Central Freedom of Information Team

Our Ref: VTR1108

28 November 2008

Dear Mr Wynn,

Freedom of Information Review Request - VTR 1108

Thank you for your e-mail of 3^rd November in which you seek to clarify your original request for information on The Stakeholder Pension Schemes Regulations 2000 (as amended by The Stakeholder Pension Schemes (Amendment) Regulations 2005).

Before dealing with the further points you have raised, you may find it helpful if I briefly explain a little about the Freedom of Information Act. Essentially, whilst it requires public authorities to provide information that they hold, it does not cover the provision of legal advice on the operation of Regulations, or of their application in individual situations.

This Department does, though, aim to help those with questions about the operation of legislation by providing guidance where possible. Any such guidance on the operation of Regulations should not, however, be taken as a definitive statement of how the legislation works. Ultimately, that is a matter for the courts.

Turning now to your request for information. In policy terms, our view is that the regulations work as follows. The general principle governing the permitted use of payments made to the scheme on behalf of the scheme member is set out in regulation 3(4) of the Stakeholder Regulations. This requires that the scheme instruments establishing the scheme must prohibit using the funds derived from the sources listed in that regulation in "any way which does not result in the provision of benefits for or in respect of the member", except insofar as permitted under regulations 13, 14 or 14B.

Regulation 13 (to which you refer in your original request), underlines the principle set out in regulation 3(4), by restricting deductions to be made from the value of the member's rights to the exceptions set out in regulations 13(2), 13(2A), 14 and 14B. This must be read subject to any other generally applicable statutory provisions such as those relating, for example, to forfeiture or bankruptcy.

Regulation 14 permits specified deductions from the value of the member's rights under the scheme. The deductions, when combined with any indirect charges, are subject to the maximum percentage specified in regulations 14(2) - (4) and 14(7). However, further deductions (those over and above that permitted by regulations 14(2) - (4)), are permitted in accordance with regulations 14(5), (5A) and 14B.

In the specific example put forward in your request (expenses deducted outside the annual management charge), unless those deductions fall within the exceptions specified in regulations 13(2) - (4), 14 or 14B, they must be accounted for within the general deductions permitted by regulation 13. There would be nothing to stop fees to auditors or managers being accounted for and deducted separately from the annual management charge (indeed this might give greater transparency as to the charges the scheme applies). However, the combined total of all specific charges made in respect of the relevant period and all other direct or indirect charges or deductions made in respect of the same period and not falling with regulations 13(2) - (4), 14(5), (5A) or 14B, must not exceed the maximum permitted percentage specified in regulation 14(7).

Note:

Regulation 14 of the original Stakeholder Regulations was substituted by new regulations 14, and 14A - 14C and inserted by The Stakeholder Pension Schemes (Amendment) Regulations 2005: SI 2005/57.

If you are not satisfied with my handling of your request please tell me why within two calendar months of the date of this letter. I will then arrange for someone to conduct an internal review of your request and my handling. The review will be conducted by another officer, usually of a more senior grade to myself. The person will have taken no part in my original decision. You will be advised of their decision in writing.

If you are still not content with the outcome of the internal review you have the right to apply directly to the Information Commissioner to look into the way your request has been handled. Please note that generally the Commissioner cannot make a decision unless you have first exhausted DWP's own complaints procedure. The Commissioner can be contacted at:-

For Complaints Resolution

Information Commissioner's Office

Wycliffe House

Water Lane

Wilmslow

Cheshire

SK9 5AF

Fax: 01625 545 510

e-mail: [email address]

Yours sincerely

DWP Central FoI Team