The Regulator has updated its scheme management detailed guidance for trustees of DC schemes in relation to the prohibition on giving charging discounts for active members.
Since April 6, 2016, trustees of occupational DC schemes used as qualifying schemes for auto-enrolment have been barred from imposing higher charges on non-active members compared to actives. The Regulator's guidance note Value for DC scheme members sets out the prohibition and explains how it works in practice. Among other things, the guidance advises trustees that if they are unsure whether their scheme provides for an active member discount, they should compare the rate and/or level of charges imposed on a non-contributing member to those that the member would have faced if they were a contributing member.
To provide further clarification about how this test should be approached, the following additional wording has now been added:
"The existence of an active member discount needs to be checked at an individual member level, as opposed to a cohort level, and you need to be satisfied that there is no individual member affected by an active member discount. This is an ongoing obligation and active member discounts cannot occur at any time."
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