The Pensions and Lifetime Savings Association (PLSA) is launching a new quality scheme after winding up the Pension Quality Mark (PQM).
The move will see the PSLA launch a committee and new standards in house, after winding up the independent company PQM Ltd that previously governed the accreditation scheme.
Under the new standards employers will be asked to increase contributions to employees’ pensions to a minimum of 12 per cent of salary, with at least 6 per cent contributed by the employer.
The new level, and a requirement that all employees must be automatically enrolled at that level, will be phased in over the next two years.
The PSLA said standards had become a more significant part of its policy work and now was the right time to make the move.
Julian Mund, chief executive of PLSA, said: "With the recent review of our policy governance structures and setting high standards being central to PLSA’s work, now feels the right time to fully integrate PQM within the PLSA."
The PQM was developed in 2009 and is available to single-employer defined contribution (DC) pension schemes. There are currently 190 schemes accredited with PQM, covering over 650,000 active savers.
PLSA is also introducing improved governance by enhancing the quality of pension trustee boards and employer-employee pension committees, and having an appropriate default investment strategy for members which will be regularly reviewed.
It will require schemes to better understand their membership, with greater focus on the overall experience of scheme members.
The new committee chairman and the full membership will be announced in due course.
Meanwhile the PLSA will no longer issue licences for PQM Ready, its accreditation scheme for master trusts.
The decision follows the Pensions Regulator’s new master trust authorisation regime which came into effect last October.
The PQM Ready licences of existing holders will continue to be valid until the end of their normal term of 12 months after their award, the PLSA has stated.
It added it would be working with its members over the coming months to examine how to further best practices under the new regime.
Andrew Pennie, marketing director at Intelligent Pensions, said given the growth of master trusts since AE and pension freedoms, it had been necessary for the Pension Regulator to step up and deliver better authorisation and regulation of this market.
He said: "The PLSAs decision to focus on improving scheme standards will provide useful guidance to schemes and employers who want to deliver a quality benefit for their members.
"They talk about improving member experience and I hope, over time, that they will move away from ‘one size fits all’ default solutions and focus standards on helping members achieve their individual needs and objectives. After all, everybody’s retirement will be different."
Research released this morning (January 24) showed workplace pension schemes boosted returns by making active choices about their investments.
Analysis by Hargreaves Lansdown found, on average, the most popular pension funds chosen by members have beaten the average return of default funds by 4.08 per cent over the past 5 years.
Dippy Singh is a freelance reporter for FTAdviser
