Pensions - Articles - TPR says trustees should check on use of alternative funds


Trustees of defined contribution (DC) schemes redirecting contributions made during COVID-19 to alternative funds should check they’re not unintentionally breaching pension legislation.

 DC schemes may have members who have self-selected investment in funds, such as property, that have been temporarily closed – or ‘gated’ – until the market normalises following COVID-19-fuelled market volatility. Contributions that come in during this period cannot be invested in these funds and so trustees will need to invest them in an alternative fund.

 The Pensions Regulator (TPR) warned  this may see these alternative funds become default arrangements for the purposes of legislation.

 This would mean they would be subject to rules such as a charge cap (if the scheme is used for automatic enrolment) and the need for a separate Statement for Investment Principles for this default arrangement.

 TPR’s view is the only ways a default arrangement would not be created are if:
 • members were made aware funds could be diverted before they selected the original fund; or
 • trustees subsequently obtained consent from members before diverting contributions.

 Trustees should review the DC code of practice, which explains where a fund will be a default arrangement. They may need legal advice to check if their scheme is affected.

 If they’ve unintentionally created a default arrangement should take immediate steps to ensure they meet legal requirements.

 TPR has reassured trustees it will continue take a pragmatic approach, based on individual scheme circumstance, in deciding whether to take enforcement action.

 However, it has warned it has no discretion in using its powers regarding chair’s statements and will continue to impose fines for non-compliance.
  

Back to Index


Similar News to this Story

FCA issues next steps to improve DB pension transfer market
The Financial Conduct Authority has set out a package of measures designed to address weaknesses across the defined benefit (DB) transfer market. It i
TPR and FCA issue factsheet for DB pension holders
The Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) have produced a factsheet for savers who have a defined benefit (DB) pension.
Industry comment on FCA announcement on DB pensions
LCP, Aegon, PLSA and Hymans Robertson comment on the announcement from the FCA regarding DB transfer market

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.