More than two thirds of pension schemes have no carried out a value for money assessment as required by the Pensions Regulator’s DC code of practice, according to research by law firm Sackers.
The survey, which was conducted among trustees and pension professionals at this year’s NAPF Annual Conference and on the Pensions Management Institute (PMI) website, found that less schemes had assessed value for money – 31 per cent – than had completed their governance assessment against the TPR’s DC Code of Practice, completed by 41 per cent.
From April 2015 the DWP is introducing new statutory governance requirements which will oblige trustees of occupational DC pension schemes to produce an annual statement detailing how minimum legal standards have been met. As 33 per cent of schemes have not yet reviewed their default fund to assess whether it will comply with the forthcoming charge cap, that will leave them short on time for making any changes needed before next April says the firm.
Sackers partner and head of DC Helen Ball says: “Many pension schemes are preoccupied with adopting the changes announced in this year’s Budget, but forget that those are largely optional. In their rush to change their benefit options and default arrangements, they should not overlook the DWP’s minimum governance standards, which will be mandatory and legally binding.
“Our findings highlight the difficulty schemes face in assessing value for money for scheme members, and emphasise the confusion that persists regarding the exact requirements of governance assessments.
”Though the new regulations proposed by the DWP are still to be finalised, it is important that trustees start to plan how their schemes will meet the minimum legal requirements as soon as possible.”