The Pensions Regulator’s new code of practice for defined contribution (DC) schemes went live today (28 July), following a 40-day parliamentary review period.
The new code sets out guidelines for all occupational trust-based schemes providing money purchase benefits.
The guidelines apply to DC schemes with two or more members, as well as money purchase elements in defined benefit (DB) schemes, such as additional voluntary contributions (AVCs).
The 37-page document contains guidelines on appointing trustees, scheme managements, investment governance, administration, and communicating with, and providing value for consumers.
TPR’s executive director for regulatory policy Andrew Warwick-Thompson said meeting the standards was particularly important as millions of new members join DC schemes through auto-enrolment.
“In revising the code, we have responded to calls from the pensions industry to shorten and simplify it, with an increased focus on legislative requirements,” he said.
“It is also being published in a dynamic and user-friendly way, including for people using tablets and mobile devices, offering the ability to navigate directly from the code to relevant legislation and companion guidance online.”
Responding to the code, Rona Train, partner at pensions consultant Hymans Robertson, emphasised the guidelines for appointing fiduciary managers.
“I suspect TPR is keen to head off similar issues in the DC world to those which we have seen in DB. Here many trustees have simply appointed their existing consultant as the fiduciary manager to the scheme, without considering what’s available in the wider marketplace.
“And in some ways, trustees are no different from members here. In the same way that members often go with their existing provider for their annuity or drawdown product, trustees may be tempted to go with existing consultants without considering what is available in the market more widely.
“It was quite telling in the DB world that those schemes with an independent trustee on board were much more likely to test the wider market than those boards without one,” she said.
She also urged DB schemes with AVCs to pay attention, saying many were not aware the code applied to them.
Sarah Hollingworth, a communications consultant at Like Minds, welcomed the emphasis on communication with members.
“The starting point for any effective engagement strategy is a clear and concise statement of what you’re trying to achieve,” she said. “We would recommend capturing communication objectives, goals, strategies and measures within a Member Engagement Statement.”
james.fernyhough@ft.com
