More than three-quarters (76%) of pension schemes surveyed are aware of The Pensions Regulator’s Six principles of good workplace DC, according to research by The Pensions Regulator (TPR).
Its Occupational pension scheme governance 2013 research, which surveyed 454 trust-based defined benefit (DB), defined contribution (DC) and hybrid pension schemes, aimed to measure and track the performance of trust-based schemes in relation to governance, administration and trustee knowledge and understanding.
Despite the majority of respondents being aware of these principles, only a third (31%) said their scheme meets all six principles, while a further 57% said their scheme meets at least some of the principles.
More than two-thirds (67%) of respondents have a third-party administrator and 18% use the scheme insurer for administration. Small schemes (34%) and DC schemes (43%) are more likely to use the scheme insurer.
On average, schemes have used around four different methods in the last twelve months to communicate with members. The most commonly used types of communications are statutory money purchase illustrations (for schemes with a DC element), summary funding statements (for schemes with a DB element) and annual benefit statements.
The proportion of pension schemes sending out newsletters or letters alongside the annual statement has continued to decline for the second consecutive year, from 65% in 2011 to 57% in 2012 to 51% in 2013.
The research also found that 18% of DC schemes offer a single investment fund. The proportion of schemes offering more than 50 funds to choose from has increased, from 3% in 2012 to 11% in 2013.
Of those schemes offering more than one fund to members, 77% have a default fund. Large (90%) and medium (93%) schemes are more likely to offer a default fund than small schemes (70%).
The research also found:
- 47% of respondents fully integrate the management of their scheme risks, while a further 37% said these risks are integrated ‘to some extent’.
- 45% of respondents have a journey plan in place for strategy and funding.
- 56% of schemes consider their board to be ‘very’ effective in their scheme governance and 41% consider it to be ‘fairly’ effective.
- 54% of respondents have reviewed their statement of investment principles in the last three years, despite it being a legal requirement.
- 12% said they have never reviewed these principles.