As the Pensions and Lifetime Savings Association releases templates to help trustees avoid pitfalls in defined contribution chair’s statements, George Currie appeals for greater regulatory flexibility in how punishments are dished out.
Trustees are required by law to produce the statements annually – in which they explain the actions they have taken to comply with certain obligations. Among other things, this document must include information on the scheme’s default fund and its governance, the costs and charges applied, and an assessment of value for members.
DC scheme trustees have found they have needed to spend a great deal of time and resource on the statement, grappling with the guidance and compliance regime. PLSA members have raised concerns about the value of the document for savers relative to the resource required to produce it.
Further changes that would give the Pensions Regulator greater discretion to target its approach to enforcement would result in better outcomes for savers and schemes
To help schemes navigate the regulatory requirements and compliance regime the PLSA has released a chair’s statement template.
This has been shaped by the knowledge, experience and expertise of a range of leading-edge legal firms and pension consultants, who have encountered first-hand the challenges presented by the regulations.
Flexible regulation would benefit members
The PLSA believes that the template will help trustees to collate and present the information required in the appropriate way, though it is not intended to replace legal advice.
The template represents a significant step forward, but the PLSA believes that further changes that would give the Pensions Regulator greater discretion to target its approach to enforcement would result in better outcomes for savers and schemes.
One approach would be for the Regulator to levy fines only on schemes where breaches of the regulations are material or have a detrimental impact on savers. In other cases, the Regulator could require schemes to correct statements where there are errors.
Prior to the arrival in the UK of the Covid-19 pandemic, the Department for Work and Pensions planned to consult on potential changes to the regulations regarding chair’s statements later this year.
Chair’s statement template to ease trustee headaches
The Pensions and Lifetime Savings Association has released a new template designed to help trustees of well-run defined contribution schemes avoid being caught out by chair’s statement requirements.
Clearly, DWP officials have other, more pressing concerns at present of which we must be mindful.
Nevertheless, a consultation that held out the possibility of more flexibility for TPR and proposed to streamline the information required in the chair’s statement would be welcomed.
George Currie is policy lead for lifetime savings at the PLSA
