The Investment Management Association is developing a minimum standard “pensions MOT” for default investments as an alternative to hard-wiring governance standards into automatic enrolment.
The DWP is currently consulting on a series of minimum governance standards designed to protect savers who are auto-enrolled into a pension scheme.
Speaking at a Nest seminar in London this week, IMA public policy director Jonathan Lipkin said the trade body is working on a standardised “pensions MOT” document as an alternative to legislative reform.
The trade body is working with the National Association of Pension Funds, the Association of British Insurers and other industry stakeholders to develop the idea.
Lipkin said: “What we want to do is ensure there is consistent quality of process across both contract and trust-based schemes.
“We think you can put in place a set of processes that you absolutely have to be doing if you are delivering a default strategy and if you are not doing those things, then you should not be delivering a default strategy.
“The question then arises as to whether you do this through legislation, as the Government wants to do, or whether you can come up with a middle ground which avoids having to hard-wire things that will evolve over time.”
Chase de Vere head of communications Patrick Connolly says: “Provided the MOT isn’t too cumbersome and focuses on things like charges and investment flexibility, this sounds like a sensible, straightforward idea.
“Best practice does evolve and so a sensible minimum standard today might not be sensible in 10 years.”