The National Association of Pension Funds has called on the government to publish final regulations on defined benefit pension scheme governance and cost as soon as possible, while also suggesting a review of The Pensions Regulator’s DC code of practice.
Responding to the Department for Work and Pensions’ better workplace pensions consultation, the industry body says it strongly supports the focus on improving governance and ensuring members get good value for money, but also raised several concerns around implementation.
It argues that the earlier schemes see final regulations the easier it is for them reduce the costs and risks for their members of bringing in these changes.
The Napf response states: “Therefore, it is essential that the government publishes the final regulations, including the definition of what is covered by the cap, as soon as possible in the New Year.”
Napf also points out that reporting on compliance with the charge cap in the 2015 scheme return leaves very little time and will be less meaningful, as it will only cover a short period rather than a full year.
“We therefore recommend that it would be more proportionate to only require schemes to report on compliance with the charge cap in their 2016 scheme returns.”
In terms of changes to scheme trustee chairman’s statements, the organisation says they should be kept short and high level, calling on the DWP to amend the draft regulations to make the list of items to be covered, shorter and less prescriptive.
“The Pensions Regulator should also review its DC Code of Practice, Guidance and related materials and reduce the level of detailed prescription.”
It also states that the DWP should amend regulations to make their requirement for trustees to ‘explain’ the process they went through to assess good value clearer.
“The Pensions Regulator and FCA should work with trust and contract-based schemes to develop guidance on the kind of steps that trustees and IGCs [Independent Governance Committees] might take to assess value.”
Napf also reiterates suggestions around the creation of an Independent Pensions Commission, which could carry out a joined-up assessment of the cumulative costs of all the reforms and regulatory changes required of pension schemes.
Finally, on transaction costs, it expresses concerned about the implementation timetable and requirement to report on transaction costs before there is agreement on a consistent framework for investment managers to provide information.
peter.walker@ft.com
