The majority of schemes with less than £100mn in assets were unaware of their new value for money duties, with the Pensions Regulator prompting these pension funds to “either wind up or take prompt action to make improvements”.
The watchdog’s annual survey of defined contribution schemes, published on June 30, showed that only 33 per cent of small schemes were aware of new rules which require DC trustees with less than £100mn of assets under management to compare their scheme’s costs, charges and investments returns against three other larger schemes.
On the other hand, 100 per cent of master trusts and 90 per cent of large schemes were informed about the duties, according to the survey, which was conducted between October and December last year.
The regulations, which dictate trustees must also carry out an assessment of their scheme’s governance and administration in line with seven key metrics, came into force for schemes at their year-end after December 31 2021.
The outcome of this assessment must be reported in their annual chair’s statement and the findings provided to TPR in their scheme return.
The survey, which comprised interviews with individuals involved in managing 305 schemes, also showed that half (51 per cent) of those aware of the new rules had carried out a self-assessment of the scheme’s governance and administration.
Nevertheless, relatively few respondents had compared net investment returns (10 per cent) or costs and charges (17 per cent) with three other schemes.
From the half of schemes (46 per cent) which had not taken any of these actions, 33 per cent justified their inaction with the fact their pension fund was very small or had few members, while 14 per cent stated the scheme’s year end was still some way off.
Ten percent of respondents said they were considering winding up and the remaining 10 per cent noted the scheme was paid up.
According to TPR’s executive director regulatory policy, analysis and advice David Fairs, “no saver deserves to be left stuck in a small, poorly governed scheme which doesn’t offer the same value as a larger one”.
“Sadly, our survey shows this remains the reality for some savers, which strengthens our belief that consolidation is the answer for many small schemes.
“Where trustees of smaller schemes can’t show that they provide this value, we expect them to either wind up or take prompt action to make improvements,” he warned.
Maria Espadinha is editor of Pensions Expert