Pension Quality Mark launches new standards to drive better retirement outcomes for savers
24 January 2019
The Pensions and Lifetime Savings Association (PLSA), is today (Thursday) launching new standards for its Pension Quality Mark (PQM) to help raise the quality of single-employer defined contribution (DC) pension schemes.
PQM was developed in 2009 and is an accreditation scheme designed to increase confidence in workplace pensions by helping employers demonstrate the quality of their scheme. It is available to single-employer DC pension schemes offered by an employer to their employees. Currently there are 190 schemes accredited with PQM, covering over 650,000 active savers.
The new standards recognise the changes to DC pensions over recent years and focus on a number of key areas to help ensure savers can get better outcomes in retirement:
- Increasing pension contributions to employees’ pensions to a minimum of 12% of salary, with at least 6% contributed by the employer. The new level, and a requirement that all employees must be automatically enrolled at that level, will be phased in over the next two years.
- Improved governance by enhancing the quality of pension trustee boards and employer-employee pension committees through focussing on skills, experience, knowledge and understanding.
- Having an appropriate default investment strategy for the members, and ensuring it is regularly reviewed.
- Requiring schemes to better understand their membership, with greater focus on the overall experience of scheme members.
The PQM has, to date, been governed by an independent company, PQM Ltd. However, standards have increasingly become a more significant part of PLSA policy work, so, alongside the introduction of the new standards, we plan to establish a new PQM Standards Committee to drive forward its work. The new Committee chair and the full membership will be announced soon. Our work on standards will be reported through the executive team to the Boards.
Julian Mund, Chief Executive, PLSA, said: “I would like to thank Gregg McClymont, Chair of PQM, and its other Board members for the work they have done helping us to prepare the new PQM standards.
“With the recent review of our policy governance structures and setting high standards being central to PLSA’s work, now feels the right time to fully integrate PQM within the PLSA. I look forward to working with the new PQM Standards Committee to help drive up standards across UK DC pensions.”
Gregg McClymont, outgoing Chair of PQM Ltd said: “The PLSA has taken the decision to wind up PQM Ltd and take over responsibility for the standards accreditation process. The Board has worked hard over the last year in designing the new standards for high quality single employer schemes. I want to thank my fellow Board members, past and present, for their commitment to PQM Ltd over the course of its existence and the PLSA for its support in our work.”
PQM Ready has historically been awarded as an accreditation for master trusts. The PLSA fully supports the implementation of the Pensions Regulator’s master trust authorisation regime this year. This builds on, and improves, the standards set by PQM Ready and it seems likely that employers seeking good quality master trusts will look to that regime for reassurance in the future.
The PLSA has therefore taken the decision that after the new authorisation regime comes into force it will no longer issue licences for PQM Ready accreditation. Over the coming months the PLSA will be working with our members and PQM Standards Committee to examine how to further best practice in scheme governance in the new regime.
The PQM Ready licences of existing holders will continue to be valid until the end of their normal term; that being 12 months after their award.
Lawrence Vousden, Head of Government Affairs and Media
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