The chief executive of the Pensions Regulator, Tony Hobman, has outlined its approach to improving the governance of defined contribution (DC) schemes.
In a speech to trustees and employers at the first South West and Wales pensions conference, he discussed the regulator’s plans to improve scheme governance and urged the industry to combat the risks inherent to DC schemes.
"We are not just a DB regulator as 85% of all UK pension schemes are small DC schemes, most of which face the following five key risk areas: poor administration; poor investment practice; unduly high charges; poor decisions on retirement choices and lack of member awareness. Our aim is to apply reasonable judgement to innovation and we encourage early discussion between the parties involved and the regulator to ensure this. These issues will be addressed in the April statement."
In response to his speech, Paul Macro, head of DC at Aon Consulting, said: "It looks like the regulator is going to press ahead with his imposition of regulations onto DC schemes. In too many cases this could have the effect of forcing companies to abandon pension provision completely, remember over regulation takes much of the blame for the demise of defined benefits."
The regulator’s governance statement will be published in April 2007.