Advisers should familiarise themselves with a new code of conduct for defined contribution pension trustees which comes into force today (21 November), The Pensions Regulator has said.
The regulator warned that from next year, it will undertake thematic reviews of the extent to which trust-based DC schemes comply with pensions law and good practice and will take enforcement action where it deems necessary.
The new code sets out guidance to help pension trustees meet the underlying requirements of pensions legislation.
According to a statement from the regulator, it is concerned that opaque costs and charges deducted from a member’s fund can significantly affect the value of their pension. Given this concern it is aiming to help trustees capture the total cost and benefits of scheme membership in a way that will demonstrate its value for money for members.
A guide published today aims to help trustees in this task as well as assessing their scheme with others in the market to potentially secure a better deal for customers.
The regulator regards this as an initial step and intends to have further discussions with the pensions sector next year on how schemes can capture and report their value for money information.
Andrew Warwick-Thompson, The Pensions Regulator’s executive director for DC, governance and administration, said: “From today, we expect DC trustees to assess their scheme against the standards set out in the DC code. Our aim is to protect retirement savers and to ensure their money is invested in good quality schemes that are well-run in the members’ best interests.
“Schemes that fall short of these standards should expect some difficult questions, and they may incur enforcement action in order to rectify breaches in pensions law.
“We also urge professional advisers to familiarise themselves with the details of the code and guidance, as they have a key role to play in helping trustees review their scheme and make improvements to its quality where necessary.”
The code comes into effect today, having been laid before parliament and the Northern Ireland assembly in July.
