But contract-based providers are celebrating statements from TPR they see as an endorsement of GPPs.
TPR says the DC code and DC regulatory guidance will apply only to occupational DC trust-based pension schemes because of the scope of its regulatory powers, although it emphasises that the six DC principles and DC quality features apply to all forms of DC provision.
The TPR consultation says: “We have carried out an analysis of the degree to which the FSA regime for work-based personal pensions already includes provisions that match the regulator’s DC quality features. 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.”
Contract-based providers have seized on these comments as evidence that TPR does not share the view held by some in the industry that trust-based pensions are inherently better than contract-based ones.
The Confederation of British Industry has backed TPR’s new code, but has cautioned against placing too great a burden on employers offering good schemes.
Darren Philp, NAPF Policy Director, said: “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 Regulator need to work together much more effectively than they currently do.
“We are also concerned that enforcing the new code through voluntary reporting requirements means there is a risk that the Regulator focuses on the wrong schemes.
“The Regulator needs to avoid placing extra burdens on schemes that are already well-managed and focus on the schemes and providers that are struggling to deliver good outcomes for savers. Despite the good intentions, this strategy risks doing the opposite.”
Martin Wheatley, managing director of the FSA and chief executive designate of the Financial Conduct Authority says: “We welcome this publication from The Pensions Regulator, and are pleased that the initial analysis confirms that there is good alignment between the Regulator’s quality features and our requirements.”
Neil Carberry, director for employment and skills at the CBI says:“The regulator needs to tread carefully, as developing high levels of saving in DC schemes, above the statutory level, depends on avoiding the over-regulation that damaged defined benefit schemes.”
Kate Smith, regulatory strategy manager at Aegon says: “We’re extremely pleased to see TPR acknowledging the many ways in which pension schemes run by FSA supervised firms already deliver on the TPR’s Six DC Principles and the many of the 36 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’.
“Contract-based schemes, no matter what their size, benefit from the advantages of scale offered by GPP providers. FSA regulation sets minimum standards, but to remain competitive, GPP providers must innovate and go beyond these minima.
“TPR is today acknowledging the many safeguards inherent within workplace pensions offered by FSA regulated firms. Relevant FSA regulations include Treating Customers Fairly principles, capital requirements, systems and controls and the approved persons regime. Of course this isn’t just contract-based GPPs, but also insured trust-based scheme offered by FSA regulated firms.”
