The Pension Quality Mark (PQM) is setting up a new standard for pension schemes that use new types of charges, in order to adapt to changes prompted by auto-enrolment.
Previously, only defined contribution (DC) pension schemes that used annual management charges (AMCs) were able to apply for the PQM, which was launched by the National Association of Pension Funds (NAPF) in 2009.
The new standard continues to require that a scheme’s charges total 1% or less for both active and deferred members, but opens the PQM up to schemes that have different arrangements, such as flat-rate charges or contribution charges.
To receive the PQM, such schemes will have to demonstrate that their charges are better than or equal to a 1% AMC for scheme members on half-average earnings (£13,000 a year). This will ensure scheme charges are good value for people on lower incomes.
Chris Hitchen, chairman of the PQM, said: “Auto-enrolment will change the way pensions are provided with new types of schemes and new types of charging structures.
“Today’s announcement ensures that the PQM keeps pace with developments in the pensions market while maintaining a focus on low charges and value for money.
“This will be an essential ingredient in re-building public confidence in pensions.”
To date, 152 pension schemes covering 300,000 active scheme members have been awarded the PQM. It recognises pension schemes that have high standards of governance and communications and contributions.
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