Meeting the DC pension scheme governance challenge

Topic:

Legal & governance

Date published:

Tuesday, 19 March 2013

The Pensions Regulator is currently consulting on a new regulatory framework for the governance and administration of occupational and contract-based defined contribution (DC) pension schemes.

Whilst I don’t think the consultation document itself tells us anything new - it reflects the various DC features and principles contained in earlier Regulator statements - I do think it highlights the potential scale of the governance challenge for smaller UK pension schemes.

The Regulator recognises that, with more time and resource available, larger DC schemes will find it easier to meet any new requirements; but the principles of good defined contribution scheme governance apply equally to all schemes. Enabling members to achieve a good outcome will require the same actions whether your scheme is big or small.

As an industry, we need to do something to help smaller schemes meet all the incoming requirements, and do it in a way that is cost effective. After all, a combination of the tough economic climate and the introduction of workplace pension auto-enrolment mean the pressure on employers and pension schemes has never been greater.

To me, the starting point must be an independent review of a scheme’s DC governance process. If gaps are found, we need to find light touch, pragmatic solutions to ensure the scheme can meet all aspects of the new defined contribution regulations. Critically, these solutions must be proportional to the size of the scheme, be easy to implement and simple to maintain into the future.

Back to opinions