The Government has issued a call for evidence into quality standards in workplace defined contribution schemes as part of efforts to protect savers who are automatically enrolled into a pension.
The call for evidence seeks views on setting minimum legislative standards for scheme governance, default strategies, administration and record keeping, and scale.
Ideas put forward in the document include:
- ensuring all schemes are overseen by a governance body, such as a trustee board, with a duty to act in members’ interests;
- making sure default investment options are designed in the interests of members and are regularly reviewed;
- forcing schemes to check regularly that contributions are invested in line with members’ instructions and within five days of being received;
- introducing a duty for schemes to consider whether members are disadvantaged by the size of their scheme. If the scheme is too small, those running the scheme would be required to consider closure or merging with another scheme.
The DWP also asks for information on how members’ interests are balanced against commercial interests.
Pensions minister Steve Webb says: “The Government wants to ensure that every defined contribution scheme used for workplace saving delivers value for money and meets some essential minimum legislative standards.”
Chase de Vere head of communications Patrick Connolly says: “We simply cannot afford to get auto-enrolment wrong. Introducing minimum standards seems like a sensible way to protect the reputation of the reforms.”