The Pensions Regulator (“tPR”) has issued a further guidance note clarifying and outlining the role tPR expects defined-contribution (“DC”) scheme trustees to be undertaking. This is due to tPR’s increasing concentration on DC schemes, following the continuing trend for employers to enrol their workforce into qualifying DC arrangements rather than the traditional defined-benefit (“DB”) schemes.
The latest guidance is part of a concerted campaign to drive up the standards of awareness and engagement of DC trustees, which tPR has complained has not been to the standards it requires. Surveys commissioned by tPR confirm this conclusion with patterns of poor governance standards in DC schemes being all too frequent. For instance, tPR has commented that too many DC scheme trustees don’t take their responsibilities seriously enough, since tPR has found that:
”……67% of all DB trustees are likely to be engaged with their scheme compared to 34% of all trustees of DC schemes. Engaged trustees are more likely to undertake governance activities encompassing administration, external expertise and training.”
In hybrid schemes which offer both DC and DB benefits, the DC section more often than not tends to be the neglected section by scheme trustees.
The new guidance provides a definition of the roles of DC trustees in comparison with DB trustees and the key differences between the two types of schemes. The standards expected of DC trustees is outlined from a DC perspective and the guidance deals with such issues as conflicts of interest, training, investment, asset protection and administration. The guidance comments that DC trustees are often overlooking their duties or approaching them from a DB trustee perspective; a perspective the tPR states is not the right approach for DC schemes.
The guidance is available by accessing the following link: http://www.thepensionsregulator.gov.uk/docs/role-of-trustees-in-dc-schemes-statement-oct-2011.pdf
Hill Dickinson has a wealth of experience in dealing with the full
range of employment and pensions issues. If you have any queries
relating to the above, or any other legal matter, please do not
hesitate to contact us
for advice.
For the latest
legal updates and alerts, follow us on twitter:
