Improving governance and best practice in workplace pensions - Work and Pensions Committee Contents

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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Prepared 25 April 2013