The National Association of Pension Funds (NAPF) today published its response to the Financial Conduct Authority’s (FCA) consultation ‘Proposed rules for independent governance committees’, submitted to the FCA on 10 October 2014.
The NAPF’s supports the Government’s and FCA’s focus on better governance in contract-based schemes. IGCs represent a big step forward in ensuring that savers’ interests are represented. While NAPF members believe that IGCs should play a wide role in representing the interests of all members of contract based schemes, they have expressed concerns about the extent to which IGCs will be able to exert influence over pension providers.
As part of its response the NAPF included the results of a short survey of its members and Pension Quality Mark (PQM) schemes. Focused on employers running contract-based schemes, the headline findings of the survey were:
- Three quarters of respondents supported the creation of IGCs, only 10% opposed them;
- 85% of respondents agreed that IGCs need to oversee deferred as well as active members’ interests;
- Respondents believe that costs, charges and value for money (76%), member communications (49%), and investment performance (40%) should be the highest priorities for the IGCs
- Respondents were split on whether providers would listen to IGCs concerns, with 36% thinking they would not listen and 30% thinking they would, and 33% unsure.
The NAPF’s paper makes four key recommendations.
- As IGCs are untested a formal review of their efficacy should be completed after two years. This review should be completed in time to allow changes to be made by April 2018.
- A formal connection between IGCs and employer-led management and governance committees should be established.
- A common framework and an IGC network should be established to allow IGCs to share knowledge and expertise as well as to assess providers’ performance and services.
- The FCA should make explicit that IGCs can consider all issues that make a difference to members, including: member communications, administration, and support for members approaching retirement.
Richard Wilson, Policy Lead: DC Pensions & Investment, NAPF, commented:
“The introduction of automatic enrolment has made it even more important that contract-based pension schemes have independent governance arrangements in place to make sure they are run in the interests of members. But in order to be effective these independent governance committees, or IGCs, must be able to influence pension providers. The current framework sets out an advisory role for IGCs rather than giving them direct powers such as those given to pension scheme trustees. To make sure IGCs are structured in a way that allows them to meet their objectives, we believe there should be a formal review of IGCs after they have been in operation for two years so that any required changes to their framework can be made by April 2018.”
A copy of the NAPF response can be found on the NAPF website.
Notes to editors:
The online survey was conducted by NAPF from 26th September to 3rd October. NAPF members and PQM schemes were invited to take part and there were 73 respondents in total, with 63 respondents answering most questions.
The NAPF is the voice of workplace pensions in the UK. We speak for over 1,300 pension schemes that provide pensions for over 17 million people and have more than £900 billion of assets. We also have 400 members from businesses supporting the pensions sector.
We aim to help everyone get more out of their retirement savings. To do this we spread best practice among our members, challenge regulation where it adds more cost than benefit and promote policies that add value for savers.
Lucy Grubb, Head of Media and PR, NAPF, 020 7601 1726 or 07713 073023, [email protected]
Eleanor Bennett, Press Officer, NAPF, 020 7601 1718 or 07825 171 446, [email protected]