Defined Contribution (DC) pension schemes are required by law to produce an annual governance statement in their annual report that illustrates, among other things: the scheme’s investment strategy and its governance; the processing of core financial transactions; the disclosure of member-borne transaction costs and charges; the assessment of value for members; and how the trustees have met trustee knowledge and understanding requirements.
Following concerns raised by PLSA members about how some of the legislative requirements regarding the statement are being applied in practice, we have worked with a number of legal firms and advisers to design the template statement, which is appropriate for standard occupational DC pension schemes.
The template is based on the requirements of regulation 23 of The Occupational Pension Schemes (Scheme Administration) Regulations 1996 as at 1 February 2020 and is designed to be used in conjunction with TPR’s detailed guidance and quick guide.
The template is designed to help trustess complete their statement though individual schemes will need to give due consideration to their circumstances to meet statutory requirements. Schemes should continue to consult their own advisers as part of this process.
The production of the template has been supported by TPR and is available for trustees via the PLSA website.
Laura Myers, Chair of the PLSA’s DC Committee, said: “This has long been a concern for trustees and that’s why I am delighted to have contributed to this template statement. It will hopefully provide a useful starting point and guide for trustees to help simplify the production time and cost on documenting their governance so they can instead focus these costs on the areas that will make tangible improvements to members’ outcomes.”
David Fairs, TPR Executive Director of Regulatory Policy, Analysis and Advice, said: “A chair’s statement is a basic requirement of good pensions governance and should be written clearly enough for members to understand and so I welcome any assistance provided to the trustees such as the PLSA’s drafting template.
“The template doesn’t remove the need for trustees to carry out the fundamental analysis forming the foundation for a chair’s statement or consider how the statement requirements apply in the case of their scheme, but it should help in collating the information needed and help to present this clearly to savers.”
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