The Pensions Regulator (tPR) has continued its advances into defined contribution (DC) scheme territory by publishing a code of practice for trust-based DC schemes.
tPR has supported the publication of the Code by reference to the fact that it necessary to get DC schemes right in order to ensure the success of auto-enrolment.
The Code sets out five core areas of scheme governance, as well as practical suggestions as to how DC scheme trustees can meet the DC "quality features". The five core areas of scheme governance for DC scheme trustees under the Code are:
- Know your scheme (for example, knowledge of the key trustee powers and scheme documentation);
- Risk Management (for example, awareness of fraud including pensions liberation and ensuring management of costs);
- Investment (for example, being clear as to what the investment powers of the trustees are and the setting of a default investment strategy);
- Governance of conflicts of interest and advisers/service providers (for example, ensuring a proper agreed conflicts of interest policy is in place); and
- Administration (for example, ensuring membership date is complete and accurate).
The Code should prove useful in giving structure to the activities of DC pension scheme trustees. The full Code can be found here.