Can your pension scheme demonstrate that it meets the Regulator’s draft good workplace defined contribution features?Follow @PwC_North
As we increasingly move to a world where more and more people are saving via defined contribution (DC) pension schemes, and automatic enrolment is just around the corner, there is a need to make sure the regulatory landscape is strong and fit for the 21st Century.
The Pensions Regulator has published 36 draft key features which underpin the six high-level principles for defined contribution (DC) pension provision that were published at the end of last year. These features have been developed following consultation between the Regulator and the pensions industry this year.
This is a wake-up call for employers, trustees and pension providers who will now have to work much harder to demonstrate that their schemes are meeting the new principles and the detailed draft features outlined by the Regulator.
Aimed at employers, trustees and pension providers, the Regulator hopes that the key features will allow schemes to be more able to demonstrate that they are meeting the principles. While the Regulator will not formally consult on the features until 2013, it hopes that by publishing the draft list at this stage, the pensions industry will become familiar with the Regulator’s view on what a good DC scheme looks like.
This is a positive and much needed step by the Regulator, and provides a great opportunity for employers, trustees and pension providers to overhaul how they deliver good DC pensions. As the DC market is set to expand, it will also bring new challenges on governance, adequacy, communications and investment which will need to be tackled. While the features will apply to all DC schemes, the challenges will differ according to whether a scheme is trust-based or contract-based.
The Regulator intends to review progress by seeing how the principles and features are integrated by larger schemes and major pension providers during the first six months of automatic enrolment. It is envisaged that some trustees and pension providers may choose to publish details of how they are addressing the principles and features.
What do you need to do?
- Conduct a fit-for-purpose review of your DC pension provision. Identify the extent to which your DC pension provision complies with each of the six principles and underlying features or whether additional changes are required.
- Review the level of services you provide to members, including the charges, the investment fund range offered and the level of support provided to members at retirement.
- Consider the key features in the design of any scheme (or amendments to existing schemes) for auto-enrolment.
How we can help
We can assist you in a fit-for-purpose review of your current processes and governance frameworks to assess how you comply against the principles and key features.
Peter McDonald – 0161 247 4567
Saq Hussain – 0161 245 2554