The Diary of a DC Pensions Gamekeeper turned Poacher
My name is Glenn Fallows. I recently joined Capita Employee Benefits as Head of Defined Contribution (DC) Governance having spent five years working in the DC policy team at The Pensions Regulator. During my time at The Regulator, I worked on the development of a number of DC regulatory projects including:
- The 31 Features for good governance in a DC scheme
- DC Code of Practice 13
- The new DC content in the Trustee Toolkit.
My last project before leaving The Regulator was to work with the Department for Work & Pensions on development of the new Minimum Governance Standards for DC schemes, particularly around the knowledge and competence of DC trustees and their ability to promote Good Member Outcomes.
Moving from working within a Government regulator to advising those who are regulated has been an eye-opening experience. Interacting on a practical and detailed level with DC scheme trustees gives a fresh perspective on the working-level impact of regulatory expectation and new legislation.
My predominant thoughts since joining Capita are those of pleasant surprise. I’m not sure I was expecting to find such a high level of interest, enthusiasm and engagement amongst trustees responsible for DC schemes. There seems to be, in many schemes, a genuine will to ensure that good member outcomes are considered and promoted as much as possible.
I suppose my key concern, having now spoken with a good number of trust boards, is the degree of confusion and frustration at the multiple levels of regulatory expectation that exists for DC schemes. Six Principles, 31 Quality Features, a Code of Practice and now DC Minimum Governance Standards. It has been good to be able to explain to trustees the story behind the development of these various standards and to show trustees how it all fits together. I’ve also had great experiences helping trustees plan their way through the regulatory maze to ensure they’re able to understand how to demonstrate they’re doing the right thing. It is truly good news to hear that The Regulator is working to refine the DC Code of Practice, to clarify expectations of trustees in the light of the new rules.
The Minimum Governance Standards are really focusing the minds and conversations amongst trustees of DC schemes and this can only be regarded as a good thing. There will inevitably be challenges in demonstrating compliance with the new requirements, particularly for schemes which have not already been reviewed and improved based on TPR’s DC Code of Practice 13. This cost is provoking trustees and employers to consider whether their scheme really is well governed and whether it really can be seen to offer value for money to scheme members, particularly those who default into the default (as it were). Disengaged members, ie those who do not select their own investments, need someone to understand their needs and develop appropriate investment strategies on their behalf - and it is this job that the new regulations are encouraging trustees to do.
At the heart of our work, and that of trustees, must be the understanding and addressing the needs of DC scheme members. The new focus brought about by the DC Minimum Governance Standards can only support this. We will continue to work with DC trustees and the employers who sponsor these schemes to ensure that members are at the forefront of pensions planning, scheme governance, communication and engagement. If you have any questions, feel free to get in touch with me.