On the go: The Pensions Regulator has warned smaller defined contribution pension schemes they will need to demonstrate their value to members or wind up, as more stringent rules come into force next month.
From October, small schemes will have to undertake more rigorous value for money assessments and report the outcome annually to the regulator.
The rules mean trustees of DC schemes with less than £100m in assets must compare their scheme’s costs, charges and investment returns against three other schemes.
They must also carry out a self-assessment of their scheme’s governance and administration in line with seven key metrics.
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As part of the new rules, where trustees fail to demonstrate their scheme offers value, they will be expected to wind up and transfer their members into an alternative scheme.
If they do not propose to do this, they must explain why and what steps they are taking to ensure their scheme does offer value.
David Fairs, TPR’s executive director of regulatory policy and advice, said: “The success of automatic enrolment has seen more people than ever before saving into DC pension schemes.
“These millions of savers should benefit from the best retirement outcome possible. To ensure this, savers must not be left languishing in poorly governed schemes that do not offer the same value as larger schemes.
“Where smaller schemes are not able to demonstrate they provide this value, it’s right they either wind up or take immediate action to make improvements.”
TPR has updated its guidance to help schemes prepare the new assessment.
This article originally appeared on FTAdviser.com
