The Pensions Regulator (TPR) has published a discussion paper on how it should support the defined contribution (DC) market in the delivery of good outcomes for savers.
TPR is inviting views on how it may be possible to further raise standards in DC provision and so contribute to greater confidence in pension saving.
According to TPR, there are currently 2.5 million DC memberships in occupational pensions and three million in work-based personal pensions.
As a result of the government’s workplace pension reforms due in 2012, it is expected that five to eight million people will be saving for the first time, or saving more, in all forms of workplace pension scheme.
The discussion paper, Enabling good member outcomes in work-based pension provision, identifies six elements which it believes are important for achieving good outcomes for savers, and explores the ability of the different segments of the DC market to provide these elements in the pension products they offer.
These elements are:
- appropriate decisions with regards pension contributions;
- appropriate investment decisions;
- efficient and effective administration of DC schemes;
- protection of scheme assets;
- value for money;
- appropriate decisions on converting private pension savings into a retirement income.
The document asks a number of discussion questions in relation to areas such as effective and efficient administration, raising standards in small schemes, protection of assets, and selection of a suitable scheme.
TPR is requesting feedback from the pensions sector, including employers, trustees, advisers, providers and stakeholder groups, by Friday 22 April.
TPR intends to consult on any further specific proposals during 2011, culminating in publication of an updated approach to DC regulation.
Bill Galvin, chief executive of the TPR, said: “This paper marks the start of a dialogue with the industry and stakeholders over what good DC pensions look like and how we can support the market in delivering good outcomes for members.
“The pension landscape has shifted since we published our approach to DC regulation in 2007, and the introduction of automatic enrolment will result in a dramatic rise in the numbers of people saving in DC schemes.
“It is important now that we ensure our regulatory approach supports the government’s workplace pension reforms and is designed to deal with current and future challenges as the market develops.”
Steve Webb, minister for pensions, added: “I welcome the additional attention the regulator is bringing to the regulation of defined contribution pension schemes.
“As we increasingly move to a world where more and more people are saving into these schemes, and approach automatic enrolment in 2012, we need to make sure the regulatory landscape is strong and fit for the 21st century.”
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