TPR to review value for small and micro defined contribution pension schemes

Pension Kilner Jar

The Pensions Regulator (TPR) has launched a thematic review into whether trustees of small and micro defined contribution (DC) pension schemes are properly assessing value for members.

The review, which will analyse chair statements from a cross section of 100 small and micro DC schemes run by either a lay trustee or a professional trustee, will consider the explanation of the value for member assessments and explore whether trustees are carrying out adequate assessments of the costs and charges paid by members.

Alongside analysing chair statements, the review will also collect qualitative information by arranging meetings with the trustees of 20 schemes in order to gather data about value for member assessments.

Currently, trustees are required to produce an annual value for member assessment governance statement that is signed by the chair of the trustee within seven months of the end of each scheme year. This is designed to help trustees identify and address poor performing areas so that good member outcomes can be achieved.

The review findings, which are expected to be published by summer 2018, will enable TPR to understand the challenges trustees face when conducting their assessments. In addition, any examples of good practice discovered by the review may be used to develop targeted guidance for this sector, to support trustees of small and micro schemes to achieve value for members.

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Anthony Raymond, acting executive director of regulatory policy at TPR, said: “Poor value for members is one of the key risks that trustee boards need to manage. From our research and experience, we believe that many small and micro schemes are failing to meet our expectations by providing a quality assessment of how their charges represent value for members. We are conducting this thematic review to better understand this position.

“We are concerned about a tail of sub-scale pension schemes and strongly believe that it is unacceptable to have two classes of DC pension saver; those that benefit from the premium of scale and good governance and administration, and those that do not.”