New proposals by the Department of Work and Pensions (DWP) will bring about changes for trustees and potentially benefit around 10 million members of defined contribution (“DC”) schemes.
The DWP consultation on these proposals, aimed at improving transparency in the disclosure of charges, costs and investments to DC scheme members, has now closed.
The measures are contained in the draft Occupational Pension Schemes (Administration and Disclosure) (Amendment) Regulations 2018 (Draft Amending Regulations) which accompanied the consultation, along with draft statutory guidance.
From 3 January 2018, asset managers are required to provide information on costs and charges to trustees upon request.
Under the proposed changes, Trustees will have to include information on charges and transaction costs in the annual Chair’s Statement, publish it on a publicly accessible website and include a link to the website in the members’ annual benefit statements.
The regulations are proposed to come into force from 6 April 2018 and the new reporting requirements would apply to schemes “on the last day of the first scheme year for that scheme to end on or after 6th April 2018”.
The regulations will apply to DC occupational pension schemes, including hybrid schemes with a DC section. However, they will not apply to small self-administered schemes, public service pension schemes, executive pension schemes, or schemes where the only money purchase benefits provided are AVCs. Defined benefit schemes are currently excluded, though the DWP has indicated that it will consider whether to extend the requirements to include them.
The government is also hoping to build confidence in pension saving by requiring trustees to disclose a statement concerning pooled funds on request.
The DWP’s proposals should help to bring clarity for members on DC occupational pension scheme costs and charges, although will add to Trustee workloads.