The Pensions Regulator has issued a warning to trustees about the risk of governance failings in ‘hybrid’ pension schemes.
Hybrid schemes contain elements of both defined-benefit and defined-contribution pension benefits. The regulator has published a statement designed to help trustees and their advisers understand the structure of hybrid schemes.
TPR executive director of DC, governance and administration June Mulroy says: “Members should be able to plan for retirement confident that they will receive the right pension benefits.
“But our research indicates that some schemes are so complex that even those accountable for running them struggle to understand their workings. And in half of cases, DB and DC assets were not held separately, increasing the potential for errors in pension payments, or when schemes wind up.
“I am concerned that some hybrids have overly complex scheme rules and out-of-date structures based on legacy advice. We will be liaising with employee benefit consultants and their advisers in the coming months to discuss these issues.”