The Regulator has laid its new draft Code of Practice before Parliament on the "Governance and administration of occupational defined contribution trust-based pension schemes". The code is centred around six guiding principles:

  • Essential characteristics – scheme design to be "durable, fair and deliver good outcomes for members".
  • Establishing governance – a scheme governance framework is to be established at set up.
  • People – a "fit and proper person" test for decision makers who should understand their duties.
  • Ongoing governance and monitoring – governance and monitoring through the full scheme lifecycle.
  • Administration – timely, accurate and comprehensive processes and records.
  • Communications to members – communications designed to allow members to make informed decisions about their retirement savings.

The Code is expected to come into effect in late autumn 2013, and takes account of suggestions raised during consultation on a draft Code published in January 2013 (the response can be found here). Among other things, the new Code is a lot shorter and makes clear the distinction between trustees' legal obligations and suggestions for good practice. The Regulator has also published an introductory guide (please click here) to help employers and trustees better understand the Code.

The Regulator confirmed that over the next few months it will publish additional good practice guidance for schemes and, to aid employers, an updated guide to help them decide on the best scheme for them. As DC scheme membership increases with requirements of auto enrolment, the importance of well run, quality, DC schemes increases and the Code and any additional guidance will no doubt be welcomed as helping trustees to understand best practice. However, personal pensions remain exempt from the Code, leaving a large number of pension savers without the comfort now provided in relation to occupational DC pension schemes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.