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Pension experts back TPR DC governance proposals

Pension experts have backed a series of proposals by The Pensions Regulator designed to boost governance in trust-based defined-contribution schemes.

Earlier today, TPR published a consultation setting out a new framework for the regulation of DC schemes.

The regulator has outlined six key principles and 31 quality features which schemes should be able to demonstrate in order to ensure good outcomes for members.

The quality features cover areas such as contributions, investments, governance standards, administration, value for money, converting a pension pot into a retirement income and member communications.

In the consultation, TPR acknowledges the FSA rules which govern contract-based schemes already include provisions which match the quality features it has set out.

TPR says: “Our analysis suggests that the FSA’s regulatory regime is in many ways parallel to the regulatory framework that applies to occupational DC trust-based pension schemes.”

Aegon regulatory strategy manager Kate Smith says: “We are extremely pleased to see TPR acknowledging the many ways in which pension schemes run by FSA supervised firms already deliver on the six DC Principles and many of the features which underpin these.

“Some commentators often overlook, or simply aren’t aware of, the many positive governance arrangements and scheme design features offered by providers of GPPs and wrongly jump to the conclusion that trust-based is inherently best.”

Fidelity head of DC and workplace savings proposition Richard Parkin says: “We are delighted that TPR has recognised that the regulatory regime for contract-based pensions is comprehensive and delivers many of the principles already.

“The claim by some that trust-based plans are the only viable scheme type is flawed and demonstrates a naivety as to what makes a good DC pension scheme.”

However, the National Association of Pension Funds insists TPR’s proposals should apply to both trust and contract-based schemes.

NAPF policy director Darren Philp says: “We are disappointed that the proposed code only applies to trust-based pensions and not contract-based schemes. This means that around three million people are saving into a type of pension that is overlooked by this effort.

“All types of pension need to meet high standards, and we need a joined-up regulatory approach. The FSA and TPR need to work together much more effectively than they currently do.”


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