New Pension Standards Outlined

Today (10th January 2013) the pensions regulator has published standards that defined contribution (DC) pension schemes should meet.

DC schemes, which started last autumn with larger firms and have increasingly replaced final salary pension schemes, invest the money a worker pays into it and any employer contributions and give a lump sum on retirement, which can then be used to secure a pension income.

The Pensions Regulator has developed six principles for the good design and governance of workplace DC schemes, aimed at promoting communication with members and ensuring clear accountability. These six standards are being issued for consultation, with responses to be submitted by March 28 2013.

Chief executive of the Pensions Regulator, Bill Galvin, said:

"We expect all DC schemes to demonstrate how they will comply with our principles for good DC schemes and this will give employers reassurance about their choice of scheme."

"Many members will not have any experience of DC pension saving, so it's vital that schemes are run by capable people who act in members' interests – from enrolment to retirement."

One of the reasons these six standards are a welcome addition is that some recent research by the Pensions Regulator found that larger trust-based occupational DC schemes are more likely to offer retirement savers a high-quality service than smaller ones.

Mr Galvin added:

"Where we find schemes fall short of the standards we have set out, we will expect them to improve.

"Some smaller schemes may find this challenging and decide that the interests of their members would be better served in another type of arrangement."

Source:

Telegraph - New pension standards outlined