The Pensions Regulator has published its annual DC survey report (you can read it here), revealing that almost three in four members are now in pension schemes which meet minimum governance standards. However, the report also suggests that many small and micro schemes are continuing to fall short of the mark.
The report sets out the Regulator’s findings following a survey of DC schemes which was carried out earlier this year. By conducting surveys on an annual basis, the Regulator hopes to better understand the extent to which trustees are meeting key governance requirements, and also to measure how they are performing against the expectations as set out in the DC code of practice number 13. The Regulator has indicated that the results of the survey are consistent with those carried out in previous years and they support the Regulator’s existing assessment that whilst most DC savers are in schemes with relatively good governance and administration, there is a “long tail of smaller schemes” that continue to fall below the standards expected.
To address the Regulator’s broader governance concerns in relation to both DC and DB schemes, it is currently running a consultation entitled “The Future of trusteeship and governance”. This sets out a number of proposals aiming to reduce the number of poorly run schemes, including:
- Stronger requirements around trustee knowledge and understanding, skills and ongoing learning and development. Should there, for example, be a requirement for trustees to demonstrate how they have acquired a minimum level of knowledge and understanding, such as through training or qualification, or should a minimum level of ongoing learning for all trustees should be introduced, for example through CPD-type training?
- Scheme governance structures for effective decision making, including greater diversity on trustee boards, and an aspiration to see an accredited professional trustee on every board in the future. For example, should there be a requirement to report to the Regulator on what actions schemes are taking to ensure diversity on their boards and to demonstrate that they have the right mix of skills, knowledge and understanding for running the scheme?
- Facilitating DC consolidation for those schemes that are either unable or unwilling to meet the standards of trusteeship and governance expected.
The consultation is open until 24 September 2019 and you can have your say here.
If you’d like to discuss any aspect of this blog, please get in touch with your usual contact at Brodies.
On August 14, 2019