Trustees and committees overseeing defined contribution arrangements have been thrown a line with new reporting templates to help them meet their governance obligations, but some argue a comparative framework could further strengthen the assessment of value in DC.
DC schemes across both the contract and trust-based arenas were hit with a slew of regulation earlier this year as the Department for Work and Pensions and the Financial Conduct Authority attempted to unify standards in these two areas.
New rules around independent governance committees, the charge cap for auto-enrolment default funds and tighter governance requirements for trust-based schemes introduced in April have tested the ability of pension professionals to stay abreast of mounting governance requirements.
We thought it was a really great opportunity to give people a bit of a head start in getting to grips with these new requirements
Nicola Rondel, The SPP
The Society of Pension Professionals, the representative body for a wide range of providers of advice and services to work-based pension schemes and their sponsors, has compiled two standard reporting templates to assist DC scheme trustees and IGCs comply with their legal obligation to produce an annual governance and IGC statement, respectively.
The trustee version is intended to reflect the requirements of regulation 23 of The Occupational Pension Schemes (Scheme Administration) Regulations 1996 and the IGC version the requirements in COBS 19.5.5.
Nicola Rondel, chair of the SPP DC subcommittee, said the templates aim to support the two groups battling an “overwhelming” volume of new regulation.
“A lot of the detailed content of these governance statements will be very specific to [the] scheme in relation to the trustee version or the particular provider [for] IGCs, but the legislation is very prescriptive,” said Rondel.
“We thought it was a really great opportunity to give people a bit of a head start in getting to grips with these new requirements.”
Rondel said the templates would be reviewed and updated to reflect developments in industry practice on an ongoing basis.
Henry Tapper, director at consultancy First Actuarial, said there was a need for some standardisation across reporting practices.
“Otherwise those people who are acting for the members at the employer level have no way of comparing apples and pears,” he said.
However, Tapper said it was crucial for the industry to develop a comparative framework for measuring value for money.
“That would be really meaningful – people could start looking at IGCs and have a meaningful debate about whether these organisations are doing what they should be doing.”
Striking a balance
Tim Smith, senior associate at law firm Eversheds, said a degree of standardisation would help improve consistency across reporting, but it was important for IGCs to focus on their specific context.
“It’s about striking the balance between consistency, so it’s clear that there is… a consistent level of oversight, but also allowing IGCs to reflect the particular issues for their provider and for the schemes they’re overseeing,” he said.
Smith added that in the trust-based environment, a base reporting template would be particularly helpful.
“It’s useful for them to have a checklist to work against as they’re getting used to the new regulations,” he said.
“Then again, it's important they don’t just adopt a tick-box mentality, but are thinking more broadly about issues like good value.”
