Around 1.5 million employers signing up to auto-enrolment are set to receive correspondence advising them to choose schemes that comply with the Pensions Regulator’s six principles for workplace defined contribution (DC) schemes, the House of Commons Work and Pensions Committee heard yesterday.

When asked how the regulator will ensure contract-based DC schemes comply with these principles, its chief executive Bill Galvin said: “We are writing to employers, all of the 1.5 million that are going to be affected [by automatic enrolment] over the course of the next four years.

“Some of the nudge communication will be around when [employers] go to choose a pensions scheme they should ask the simple question – ‘are you in line with the regulator’s six principles?’. It’s a demand-led strategy in the contract-based space – I think it can be effective.

“The mid-market will need something that’s relatively straight forward and that allows them to get comfort when they’re choosing a pensions scheme off the shelf for their employees.”

The statement comes soon after the regulator published its consultation review on regulating work-based DC pension schemes in which it analyses how the six DC principles and other quality features could be delivered in the workplace.

Amongst other discussions, the select committee also heard that it was too soon to consider a cap on consultancy fee charges.

Galvin said: “I think it’s probably a bit too early to say whether a cap is necessary and whether the balance of risk justifies a cap in terms of pushing out the most egregious practices versus potentially saying that that level of charging is ok.”

Instead, Galvin highlighted two key focuses: pension charge transparency and accountability. Citing the work of ABI, IMA, and NAPF to improve transparency around charges, Galvin said: “We want to see this adopted by the whole of the industry.”

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