Trustees urged to act now on new DC standards

Trustees urged to act now on new DC standards

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.

Categories: News, UK Pensions

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