The National Association of Pension Funds (NAPF) has welcomed and responded to the Government’s call for evidence into quality standards in workplace defined contribution (DC) pension schemes.
In its response the NAPF highlights the current fragmented DC landscape, and warns of a growing governance gap, with schemes increasingly being used for auto-enrolment without good governance. The NAPF believes that there should be fewer, larger and well-governed schemes and cites strong evidence that members of larger schemes are likely to benefit from economies of scale.
Darren Philp, NAPF Director of Policy, said:
“With millions of people being auto-enrolled into DC pensions over the next few years, it is essential that pension schemes are capable of getting good results for savers. We are pleased that the Government is considering minimum legal standards for DC pensions.
“Securing good outcomes for pension savers requires strong governance. More needs to be done to raise standards of governance across the piece and ensure there is always someone effectively and independently representing the member.
“While trustees have a duty to uphold members’ interests, more can undoubtedly be done to ensure that trustees have the time and resources to properly consider their DC schemes. There is an inherent governance vacuum in contract-based schemes but the situation is not unmanageable – there are many excellent contract-based schemes where the employer steps up and takes responsibility for governance. It makes sense that governance sits at employer-level in these schemes.
“The emerging mastertrusts should prove to be good auto-enrolment solutions for those employers not used to dealing with pensions, but we need to ensure that they meet minimum standards, deliver value for their members, and have strong independent governance.”
Mr Philp added:
“The NAPF has been leading the way in raising standards in DC pensions, particularly through the Pension Quality Mark. It is good to see strong and widespread interest in quality so the Government should ensure its work is well aligned with the PQM and the Pensions Regulator’s DC Code of Practice.
“We think the Government needs to revisit a couple of its proposals, for example whether it is feasible to give commercial providers a trustee-style fiduciary duty. But we support the broad direction of travel and will work with the Government to overcome these obstacles.”
In its consultation the Government asked for evidence on the current state of pension scheme governance, investments, administration, and the scale of schemes.
Notes to editors:
1. The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,300 pension schemes with some 16 million members and assets of around £900 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.
2. For further details on the Pension Quality Mark & the Friend of the Pension Quality Mark initiative: http://www.pensionqualitymark.org.uk/ and http://www.pensionqualitymark.org.uk/friendofpqm.php
Dee Sullivan, Head of Media and PR (interim), 020 7601 1717 or 07917 506 683, [email protected]
Aimee Savage Richards, Press Officer (interim), 020 7601 1718 or 07825 171 446, [email protected]