The employer’s role in running a pension scheme: Pensions Regulator guidance issued

24 September 2010

The Pensions Regulator (“Regulator”) has issued an overview of five key areas to help employers understand their role and responsibilities in running pension schemes. This guidance has been issued in order for the Regulator to fulfil his role in promoting good administration in occupational pension schemes. The overview builds on previous guidance issued by the Regulator and many employers will be familiar with what the guidance contains. The key areas identified by the Regulator cover guidance on scheme:

• administration;
• governance;
• communications;
• retirement choices; and
• regulatory duties.

Although it is an overview, the guidance is wide-ranging. Within this insight, we provide some excerpts from the guidance in order to provide a sample of some of the suggestions made by the Regulator that employers should consider implementing if they have not done so already. For instance, under the heading of “administration” the Regulator suggests:

“…Without good administration your scheme could face difficulties, leading to unforeseen costs or the need for extra time and resource to put things right…You should periodically reconcile your employee data with member data (held by the trustee). This reconciliation is essential to ensure the ongoing accuracy of member records. It’s another way you can prevent costly errors that can put a strain on resource."

Under the heading of “communications” the Regulator states:

“Clear and simple communications are particularly important in DC schemes where many important decisions are made by the members themselves. Yet many members don’t understand pensions. They may well make poor decisions, or take no action at all, relying on default options. And the consequences will be fully borne by the members themselves…While trustees are responsible for scheme communications to members (and must comply with the relevant disclosure regime), employers have recognised that it benefits them as well as members if there is improved member understanding.”

More detailed information can be obtained from other publications issued by the Regulator. However, as an overview, the guidance is a useful revision of existing “good practice” suggestions made by the Regulator for employers to consider and implement in dealing with their occupational pensions schemes. The guidance can be obtained by clicking here.