The Pensions Regulator’s (TPR’s) defined contribution (DC) code of practice has come into effect, along with its compliance and enforcement policy for DC casework and updated good practice guidance.
TPR said it will expect trustees of trust-based DC pension schemes to demonstrate how they comply with the code, which was consulted upon earlier this year and sets out practical guidance on how pension trustees can meet the underlying requirements of pensions legislation.
The code comes into effect today, having been laid before Parliament and the Northern Ireland Assembly in July.
TPR said it wants to see all consumers enrolled into well-managed schemes that can offer good outcomes. From next year, the regulator plans to undertake thematic reviews of the extent to which trust-based DC schemes are compliant with pensions legislation and associated good practice in different areas. Where necessary, it will take enforcement action to address breaches in the underlying law.
TPR executive director for DC, governance and administration Andrew Warwick-Thompson said: “From today, we expect DC trustees to assess their scheme against the standards set out in the DC code. Our aim is to protect retirement savers and to ensure their money is invested in good quality schemes that are well-run in the members’ best interests. Schemes that fall short of these standards should expect some difficult questions, and they may incur enforcement action in order to rectify breaches in pensions law.”
The regulator said it is concerned that opaque costs and charges deducted from a member’s fund can have a significant impact upon the value of their pension and wants to help trustees capture the total cost and benefits of scheme membership in a way that will demonstrate its value for money for members.
To help pension trustees to run their schemes to a high standard, the regulator has previously published a set of 31 quality features – some of which are present in legislation, others in industry good practice.
Next year the regulator also intends to publish a template ‘comply or explain’ governance statement that DC trustees can use to inform scheme members, the employer and the regulator whether they meet the DC quality features or, where the features are not fully present, how their approach is in members’ interests.
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