Trustees urged to act now on new DC standards
Thursday 20 August 2015
The Pensions Regulator is calling on trustees of defined contribution (DC) pension schemes to ensure they are on track to meet new requirements introduced in April following a change in the law.
The new requirements are designed to drive up the quality of governance and administration in workplace DC schemes and deliver good member outcomes.
The new duties state a scheme must:
- meet new governance standards and explain how it has done so in an annual chair's statement
- have an appointed chair who signs the annual statement
- be compliant with the new charge controls, which relate to schemes used as automatic enrolment 'qualifying schemes'
Schemes which conclude they are unlikely to comply with the charge cap may be planning to use the 'adjustment measure' provision, so that the charge cap won’t apply for a particular default arrangement. Trustees should be aware that the deadline for using the adjustment measure, unless certain exceptional circumstances apply, is 6 October.
The regulator, which is now contacting trustees to remind them of their duties, has published a number of products to help pension scheme trustees get to grips with the new requirements.
The products include an essential guide to the governance standards and charge controls and a new list of frequently asked questions about the changes, in particular about the appointment of trustees for relevant multi-employer schemes, which include master trusts.
This year’s scheme return for DC schemes contains some new questions relating to the April changes and the regulator has produced a checklist to help trustees prepare for completing it.
Charles Counsell, Executive Director at The Pensions Regulator, said:
"The charges and governance standards are a welcome step to raise the quality of occupational DC schemes and to protect the hard-earned savings of members. Trustees will have to demonstrate how they are meeting the requirements in their annual chair’s statement.
"We have provided a number of online resources to help trustees meet their duties, and I urge those who have not done so to visit our website for support. Trustees will need to establish whether their scheme must comply with any of the new requirements and we advise that they may need to seek professional advice to do this.
"Those planning to use the adjustment measure should be aware that they must notify employers, members and the regulator at least one month before the 6 October deadline."
If a scheme is not compliant it may be subject to enforcement action, including fines.
- Changes to the law from 6 April 2015 mean that trustees of many occupational pension schemes offering money purchase benefits will have to meet new requirements.
- The law requires a trustee board to appoint a chair. The chair will be responsible for signing the chair's annual statement, a document that details how the trustees have met the new governance standards. A chair should have been appointed by 5 July 2015.
- An 'adjustment measure' may only be used before 6 October 2015, except in exceptional circumstances. To use the adjustment measure the scheme trustees must comply with a number of requirements including notifying the employer, members and The Pensions Regulator at least one month before they intend to use it, providing the date on which the measure will take effect. More information on using the adjustment measure is available on the regulator’s website.
- The Pensions Regulator is the regulator of work-based pension schemes in the UK. We have objectives to: protect members’ benefits; reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only.
Press contactsMatt Adams 01273 662086