On the go: Small defined contribution schemes are not meeting the Pensions Regulator’s expectations when it comes to demonstrating value for members, according to its latest research.
It found that the trustees of about one in 10 small schemes, and only a third of medium schemes, are doing everything that the watchdog believes is essential to assess value for members, including having good knowledge and understanding of costs and charges paid by members.
The picture for the country is generally positive, as 86 per cent of DC members reside in schemes that are fulfilling the regulator’s expectations.
But the majority of chair statements received from small and micro-sized schemes in response to a request by the regulator did not achieve the standards set out in the regulator’s DC code.
Of the 68 statements received, it is possible that as many as 25 had not carried out a value for money assessment. Ten schemes appeared to have only considered charges in their analysis.
Only 14 per cent of small and 19 per cent of micro schemes met the expectations, the regulator said.
David Fairs, executive director of regulatory policy, analysis and advice at the regulator, said: “Poor value for members is a key risk which needs to be managed. Any small schemes unwilling or unable to assess value for members should seriously consider if members would be better off being moved to a bigger scheme which benefits from economies of scale.”
“It is essential that members get the benefits they deserve from their pensions. Assessing value for members enables trustees to identify and address poor performing areas, in turn making a scheme more likely to provide good outcomes for pension savers,” he added.
