- There is strong support for key elements of the proposed DC Code
The Pensions Regulator is shortly to issue a new DC Code for trust based DC schemes and the accountant’s professional body, the ICAEW, is consulting on a new assurance framework for DC master trusts. In light of this, KPMG surveyed 50 DC pension schemes with assets ranging from £25 million to over £1 billion and found strong support for key provisions of the proposed DC Code. 0ver 90% of schemes polled were either pure DC or hybrid schemes.
Over 65% of schemes believed that external assurance for master trusts should be mandatory. Over 70% supported the Value for Money test.
Kevin Clark, Associate Partner in Pensions Audit at KPMG commented: “Our findings reflect what we are seeing when engaging with DC clients. There is a clear majority for external assurance of master trusts to be a mandatory requirement. This echoes the Pension Regulator’s view that there is a perceived “conflict of interest” in some of the schemes where the sponsor is the provider of services.
The strong support for the value for money test demonstrates the need for good benchmarking of DC schemes. But the challenge will be in achieving meaningful comparisons because of the lack of comparable data in this area. And the challenge for trustees will be (in some cases) a limited scope to act where the value for money test suggests that change may be needed.”
The Pension regulator is due to issue the new DC Code for trust based arrangements shortly following consultation on the draft earlier in the year. The ICAEW is currently consulting on a assurance framework for master trusts.
Master Trusts have been set up in to accept DC transfers and also to offer an alternative to NEST. Some master trusts have been established by the providers to the scheme for both administration and investment services and the powers of the trustees to act are limited. This presents a conflict as it may restrict the ability of the Trustees to comply with key parts of the Code.
The value for money test is an important part of the Code and for this to work; trustees will have to have access to data from other schemes in order to make comparisons.
For further information please contact:
Margot Cowhig, KPMG Corporate Communications
Tel: 0207 694 4246 Mobile: 07920 274856
KPMG Press Office: 0207 694 8773
Notes to editors
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 12,000 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2012. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 156 countries and have 152,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.
KPMG currently audits over 700 UK pension schemes. It has a UK-wide pensions audit practice and provides additional assistance to pension schemes via pensions assurance, tax, investment, restructuring and trustee and corporate consultancy services.