10 July 2023
As the Pensions Regulator (TPR) publishes its survey of Defined Contribution (DC) schemes, which highlights 70% of micro schemes and 58% of small schemes were unaware of the new requirement, RSM UK says greater prioritisation from the regulator is needed to protect DC members’ pension pots and support trustees.
Karen Tasker, pensions audit partner, RSM UK said: ‘The risk of DC members losing their investment to fraud or scams in a poorly run scheme, or not achieving the maximum investment returns, is likely to be higher in smaller schemes than in large ones, which are more likely to have strong internal controls in place. The lack of awareness of the new value for member assessments among smaller schemes is worrying, and suggests that the regulator should now be looking to prioritise this segment to protect pensions.
‘If TPR uses its enforcement policy the burden on trustees is diminished. This needs to happen now, but delays on The General Code, Funding Code, and Pensions Dashboard means it looks unlikely there will be much appetite to address this in the short term, so DC members could lose out.
‘In the current unstable economy, any delay in enhancing the governance framework, particularly the value for member assessment, could mean DC members are left with very little if the investment governance is poor. In an environment where living costs are rising rapidly, these small DC schemes could hold vital security for some members.’