Pensions Expert Comments On Regulator’s Proposals
Employers could be confused by the Pensions Regulator’s decision to outline new standards for defined contribution (DC) pension schemes and not address other schemes as well, according to a legal expert at Irwin Mitchell.
The organisation has outlined a package of measures for consultation which includes 31 quality features that schemes need to meet, as well as a ‘comply or explain’ regime in relation to monitor their enforcement and any inconsistencies.
According to the Pensions Regulator, the standards have been announced as part of an effort to ensure that schemes are prepared as the rollout of auto-enrolment continues, with employers and employees set to more engaged in pension saving.
Nigel Bolton, a Partner at Irwin Mitchell, specialises in providing legal advice to businesses in relation to pension issues.
Commenting on the proposed measures, he outlined: “The announcement of a regulatory framework is unsurprising given the dawn of automatic enrolment and the numbers of employees being entered into DC schemes.
“It is however surprising that only trust-based schemes are addressed in this package of proposals, given the number of employers that may opt to use contract-based DC schemes. It is to be hoped the FSA will introduce corresponding requirements in this area.
“As of yet there are no parallel provisions relating to contract schemes, which means there is potential for confusion among employers. Some may have gone down one track for auto enrolment in choosing a scheme, but following the release of regulation they may find that they have to reconsider their options to provide best value for money for their employees.”
Nigel also warned that concerns could arise that these standards mean DC schemes may become bogged down in red tape.
He added: “Ultimately though, the Pensions Regulator is focusing on the issue of transparency by insisting that employees should understand charging structures to be able to make informed decisions.”