The Pensions Regulator has outlined six key principles for defined-contribution pension provision which will form the basis of its approach ahead of automatic enrolment.
The principles, published today, are designed to cover the lifecycle of a DC scheme, from the design and set-up phases through to the ongoing management.
There is also an emphasis on member communications as the regulator looks to increase the pressure on insurers to promote the open market option at retirement.
TPR chief executive Bill Galvin says: “It goes without saying that all schemes should be designed and run in their members’ best interests and be capable of delivering a good outcome. But at present DC standards are mixed with too many schemes providing poor value for money.
“We want to work with the pensions sector to establish a shared understanding of what a good DC scheme looks like and for all schemes to be able to meet these standards.
“This will help employers to feel confident that they are choosing a quality scheme for their workforce, and for members to feel confident that their pension pots are safe and well managed.”
The six principles are:
· Schemes are designed to be durable, fair and deliver good outcomes for members;
· A comprehensive scheme governance framework is established at set-up, with clear accountabilities and responsibilities agreed and made transparent;
· Those who are accountable for scheme decisions and activity understand their duties are and are fit and proper to carry them out;
· Schemes benefit from effective governance and monitoring through their lifecycle;
· Schemes are well administered with timely, accurate and comprehensive processes and records;
· Communication to members is designed and delivered to ensure members are able to make informed decisions about their retirement savings.