Regulator sets out
approach to DC regulation and highlights importance of good governance
THE PENSIONS
REGULATOR News Release (PN/07/05) issued by The Government News
Network on 25 April 2007
Industry-wide
views on the regulation of defined contribution (DC) schemes have
today (Wednesday) been published by the Pensions Regulator
following its recent consultation, alongside a discussion paper on
pension scheme governance.
Identifying key issues for DC schemes - including administration,
investment choices, charges, decisions on retirement choices and
member awareness - the consultation document set out proposals on
how DC schemes will be regulated. The consultation responses will
inform guidance setting out how the Pensions Regulator will
regulate DC schemes which will be published in due course.
The regulator has also published a discussion paper on pension
scheme governance and invites comment from the pensions community.
The paper highlights the pivotal role of education and the
importance of good governance in running all schemes. Key themes
relating to defined benefit schemes are managing conflict, the
employer covenant and relations with advisers. Issues around
administration, investment choices and winding-up relate to all
schemes and these issues will also be highlighted in the DC guidance.
Chief executive, Tony Hobman, said: "Our approach to both DC
regulation and governance will be to educate, enable, and then
enforce - supporting schemes is our priority, alongside
partnership working. Intervention will be only as a last resort."
To view the DC consultation response paper or the governance
discussion paper visit http://www.thepensionsregulator.gov.uk
- ENDS -
Notes to editors:
1. Addressing the risks to DC schemes, and encouraging good
governance are two of the Pension Regulator's three principal
themes for this year (alongside scheme funding) as set out in its
Medium Term Strategy.
2. The consultation document on DC risk did not propose new
regulation - rather set out how the regulator proposes to regulate
DC schemes, one of its statutory objectives. This applies to all
work-based DC schemes, both trust-based and contract-based.
3. The regulator's focus in regulating DC schemes and
encouraging good governance is on education and support.
Intervention is a last resort.
4. More than 40 responses were received to the DC consultation.
5. Good governance is at the heart of a well run pension
scheme.The regulator has already done much work on encouraging
good governance, including the development of free online learning
and the introduction of codes of practice and guidance.
6. There are many common issues spanning both documents, for
example, risks to members in DC schemes - specifically
administration and investment, making it sensible that we publish
both at the same time.
7. The Financial Services Authority has worked with the Pensions
Regulator in the development of the DC risks and governance
proposals where both organisations have an interest, in particular
the governance of contract-based pension schemes. The FSA welcomes
the discussion paper and looks forward to continue working with
the Pensions Regulator, the industry and other stakeholders to
develop mitigation strategies that are proportionate to the risks
and reflect the relevant regulatory frameworks. (For further
information please contact the FSA press office on 020 7066 3232.)
8. The Pensions Regulator is the regulator of work-based pensions
in the UK, with wide-ranging and flexible powers under the
Pensions Act 2004. The Pensions Regulator's powers include
the ability to:
* collect detailed scheme information;
* issue improvement notices and third party notices, enabling the
regulator to ensure problems are put right;
* freeze a scheme that is at risk while the regulator investigates;
* disqualify trustees who are judged not fit and proper to carry
out their duties; and
* issue a contribution notice or financial support direction
The Pensions Act 2004 also imposes a statutory obligation on
'whistleblowers' to report suspected breaches of the
legislation to the regulator.
* http://www.thepensionsregulator.gov.uk
Non-press enquiries: 0870 6063636
customersupport@thepensionsregulator.gov.uk