The Pensions Regulator (TPR) is pressing hundreds of single-trust pension schemes to demonstrate they have reviewed the strategy and performance of their default pension schemes.
TPR has contacted trustees of hundreds of schemes and asked them to confirm that they have reviewed their default arrangements
More than 500 DC schemes with between two and 999 members have been contacted as part of the pilot. Trustees have been asked to review TPR guidance and confirm if the strategy and performance of their scheme’s default arrangement have recently been reviewed and remain suitable, by completing an online declaration form.
TPR says initial indicators show positive trustee engagement with the pilot.
Under law, a pension scheme which provides money purchase benefits must review its default strategy and the performance of its default arrangement every three years, or when there is a significant change in a scheme’s investment policy or demographic of its membership. Trustees should check the default arrangement is performing as expected and that the default strategy ensures investments are made in savers’ best interests.
TPR says trustees struggling to meet the expected standards should consider whether value for savers would be improved by transferring them into an alternative and better run scheme.
TPR executive director of regulatory policy, analysis and advice David Fairs says: “Our focus is on good outcomes for savers in their retirements. To provide pension savers with the best pot for retirement they need good investment returns as they contribute into a pension through their employment.
“Regularly reviewing a pension scheme’s default arrangement, which the majority of savers contribute into, is vital for trustees to ensure they are investing in the best interests of members.
“We are working to wake up those trustees who, research has shown us, do not engage with the regulator or sometimes do not realise they are not meeting the standards of governance or administration that we expect.
“This pilot is among some of the things we are doing as part of a new approach to contact trustees about their legal duties, support them to become compliant where we can and inform them about the alternatives – including winding up their scheme – if they do not or cannot meet the standards which we expect.”