9 Conclusion
144. Auto-enrolment will bring many millions
of people into pensions saving for the first time. These individuals
will not necessarily be equipped to deal with the complex and
confusing world of pension saving or to make the major decisions
affecting their retirement income that the DC pension saving system
might require of them. High quality pension scheme governance,
which protects individuals and focuses on maximising retirement
income, will therefore be essential over the next few years as
people are brought into pension saving for the first time.
145. The Government, regulators and the pensions
industry will need to work hard to provide the protection that
scheme members need. This should include ensuring that contract-based
schemes operate with the same level of governance as trust-based
schemes and that employees are not disadvantaged by being enrolled
into small contract-based or trust-based DC schemes which lack
the benefits of scale.
146. Smaller employers, in particular, will need
support and guidance as auto-enrolment is rolled out to ensure
that they offer schemes with the necessary levels of governance
to protect the interests of scheme members.
147. Scheme members are very vulnerable to high
scheme charges which can affect their final level of retirement
income. The Government must act now to ensure that people who
are auto-enrolled into pension saving are protected from high
charges, including deferred member charges and consultancy charges.
148. The Government has taken important steps
to promote retirement saving through introducing auto-enrolment
and simplifying the State Pension in order to increase incentives
to save. Good governance in pension schemes will be critical to
the success of auto-enrolment and to building consumer confidence
in private pension saving. We urge the Government and regulators
to prioritise measures which ensure that everyone who is auto-enrolled
has a guarantee that they will be saving into a good quality,
well-governed pension scheme and that they will be assisted in
maximising their retirement income.
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