Have schemes missed the new requirements for reporting late contributions?

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Date published:

Monday, 20 January 2014

A revised code of practice from the Pensions Regulator’s (tPR) came into force on 1 September 2013 that advisers and administrators seem to have said little about - and which, therefore, may not have been flagged up to affected schemes.

This code of practice 05 applies to defined contribution (DC) schemes or those with a DC section. It sets out tPR’s expectations of trustees in relation to ensuring that correct member contributions are paid.

Whereas the old code mainly dealt with checking contributions were paid on time and reporting late payments, the new code extends trustees’ duties to include:

• applying a risk based approach to check the right amount of contributions are paid - this doesn’t mean trustees are expected to double check every weekly or monthly payroll run by the employer, but they do need to have a process in place that identifies when contribution errors are more likely to occur and which enables them to collect further information if needed
• providing members with sufficient information so they can check for themselves that they are receiving the right contributions - this could, for example, be through online access to contribution and payments information.

This has practical impacts on pension scheme trustees. They (or in practice their administrators) must set up a process that is appropriate for their scheme to monitor that contributions are paid over on time and the amounts are correct. This requirement is already in force but, for some trustees, it may take time to establish a suitable process.

Trustees also need to review the information currently provided to members and decide whether it is sufficient for individuals to check they are receiving the correct contributions. This could represent a much bigger piece of work for some schemes and assistance may be required to ensure compliance.

Gillian Graham - scheme manager

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