TPR takes tough stance on revised DC scheme returns
Monday 18 April 2016
The Pensions Regulator (TPR) is calling on trustees to prepare for changes in their annual defined contribution (DC) scheme return or risk being fined for failing to comply with the law.
TPR has begun advising trustees of DC schemes about a number of changes to the scheme return so they can plan in advance. TPR will be sending out revised scheme returns from July this year.
In a change from last year, schemes are now required to provide information about how they comply with the requirements brought in by legislation in 2015, including charge controls and scheme governance.
TPR has produced a useful checklist guide for trustees about the new scheme return.
Andrew Warwick-Thompson, Executive Director of Regulatory Policy at TPR said: “We are supporting trustees in numerous ways including new web guidance and news-by-email to help them understand how to complete the new scheme return in order to demonstrate they are meeting new governance standards. They must now identify the scheme’s chair and confirm that they have completed a chair’s statement.”
Latest figures show that scheme return completion rates have fallen for the second year running, down 18% from January 2014 to January 2016. TPR is also sending letters to a group of trustees who are in breach of the law to warn them to complete their 2015 scheme return or risk facing a fine.
Mr Warwick-Thompson added: “We are disappointed and concerned that scheme return completion rates have fallen. We expect full co-operation in this area and for trustees of all schemes to meet their legal duties. We will act where trustees demonstrate that they are not meeting even the basic 'hygiene' duty of completing a scheme return.”
- The scheme return also now includes confirming whether any of the employers that use the scheme have passed their automatic enrolment staging date.
- Recent legislation, including the Occupational Pension Schemes (Charges and Governance) Regulations 2015, comprises new legal requirements for certain schemes which came into force from April 2015.
- TPR is tasked with regulating compliance with the new requirements, as well as those that existed previously, for occupational trust-based schemes offering some form of money purchase benefits.
- If a chair’s statement has not been produced, the trustees of the scheme will be personally liable, on a joint and several basis, to pay a mandatory fine of between £500 and £2,000. However, schemes only have to provide the information if the new requirements apply to their scheme, so we urge them to get appropriate advice.
- TPR 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).
Tim Marks 01273 662092