In the consultation report , the Pensions Regulator surveys the current way DC plans are run in the UK and offers ways to mitigate some of the risks it perceives in terms of plan administration practices, investment practices, plan fees and costs and plan participant understanding of retirement plan choices.
The regulator argues that as companies gradually adopt DC plans, it is increasingly important that “individuals understand the critical issues they need to consider in order to make decisions: whether to participate in a DC scheme, what contributions to make, investment choices and, ultimately, what annuity options to take.”
In addition to using regulator powers – such as the ability to replace trustees and to issue third party or improvement notices – the new proposals center around:
- Setting standards expected of well-run plans by publishing good practice guidance aimed at at trustees, managers, employers and providers (depending on whether the plan is trust-based or contract-based), third-party administrators (TPAs) and payroll providers.
- Publicly reporting advisers and service providers (for example, through ‘naming and shaming’) as appropriate, where a consistently poor service is being provided and reporting to professional associations and institutes.
The deadline for comment is February 2, 2007. Click here to access the consultation response form.