The DWP has undertaken its review of changes to the Scheme Administration Regulations which were introduced in 2015. The 2015 amending regulations introduced changes relating to charges and to governance of trust-based money purchase schemes. This introduced the requirement to produce an annual governance statement requiring trustees to report on certain matters including financial transactions, charges, value for money for members and trustees’ knowledge and understanding.
DWP’s review concludes that the overall policy objectives behind the regulations are being met. However, the review identified that policy objectives in relation to the Chair’s statement are not being met. The DWP recognises that use of a single instrument, the Chair’s statement, to achieve multiple policy goals, scheme governance and member engagement, does not work.
The review states that the purpose of the statement was intended to act as a suite of measures to deliver better scheme governance standards and the review identifies that it should be re-focused to deliver that goal. The DWP also says that it will look at the fines regime with the aim of introducing a more risk-based approach.
The DWP indicates that it will work with the Pensions Regulator to revisit the Chair’s statement and provide clarity to the pensions industry. It indicates that the information to be contained in the Chair’s statement should be revisited and determined once the intended audience of the statement is clarified. One option considered is to split the statement so that there is a clear separation of regulatory information and information for members.
The timescale for the further review is not specified by DWP although its report suggests that in future the Chair’s statement may be shorter and more focused.
using a single instrument – the Chair’s statement – to try to achieve multiple policy goals, in respect of scheme governance and member engagement does not work https://www.legislation.gov.uk/uksi/2016/427/pdfs/uksiod_20160427_en.pdf