New pension standards outlined
Published on 11 January 2013 11:30 AM
Retirement savers could soon see their chances of enrolment into defined contribution pension schemes increased under new proposals to improve standards, according to an industry watchdog.
The Pensions Regulator, which governs work-based pensions in Britain, has issued new guidelines in an attempt to make companies more responsible for defined contribution (DC) pension schemes.
Concerns had previously been expressed following the launch of the Government's automatic enrolment scheme last October, which could see providers having to deal with thousands of employers and millions of workers who have little experience of managing company pensions.
Bill Galvin, chief executive of the Pensions Regulator, said: '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.'
Up to eight million employees were automatically enrolled to work-based pension schemes last autumn, with the majority choosing DC schemes in an effort to amass a pot of money which is then used to purchase a pension when they choose to retire.
6 golden rules
Calls had been made to guide people in the direction of value-for-money pensions, which has prompted the Pensions Regulator to develop six golden rules for the good design and management of work-based DC contributions.
Those principles include promoting good communication with members, good administration and good ongoing governance and monitoring, while also improving accountability among pension providers who may be unclear about their obligations.
The ethical guidelines have been published for consultation, with responses to be submitted before Thursday 28 March.
Mr Galvin added: '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.'
Recent research suggests that workers employed by larger companies are more likely to receive a better-value DC scheme than those employed by small firms, which has raised fears about inequality.
The Pensions Regulator said employers should be able to demonstrate how they will meet the new standards, while also explaining any teething problems in an effort to boost consistency across the industry.
Copyright Press Association 2013