10/01/13
By Paul McGurk
The Pensions Regulator has set out new standards to boost savers' chances of enrolling in good quality pension schemes.
The watchdog, which looks at work-based schemes across the UK, publish standards which defined contribution schemes should meet, to increase the chances of people enjoying a decent level of income after they retire.
There are concerns that the changes to automatically enter millions of people into work-based pension schemes mean providers need to enter dialogue with employers and employees who do not have pensions experience.
Some people need to be pointed toward schemes which offer better value for money.
Under Government reforms which came into play in autumn 2012, five to eight million people will be saving towards retirement for the first time, most through defined contribution (DC) schemes. These schemes, which have come in in place of final salary schemes, invest what a worker pays in on top of employers' contributions, providing a lump sum on retirement which can then help secure a pension income.
The regulator has pinpointed six principles which can help savers get more for their money.
They includes good communication with pension members, good administration of the schemes as well as good overall monitoring and governance. The schemes should also make sure that there is a clear understanding of accountability on behalf of administrators, and that the schemes are fair and robust in general terms of durability.
The standards are currently under consultation ahead of a March 28 closing date.
Pensions Regulator chief executive Bill Galvin said: "We expect all DC schemes to demonstrate how they will comply with our principles for good DC schemes and this will give employers reassurance about their choice of scheme. Members bear risks where DC schemes perform poorly.
"Many members will not have any experience of DC pension saving, so it's vital that schemes are run by capable people who act in members' interests - from enrolment to retirement."
Studies have found that larger, trust-based occupational DC policies are more likely to offer a quality service to savers, as opposed to smaller ones. The watchdog said schemes must be able to show how they met the principles outlines - or explain how they could not.
