The Pensions Regulator has published a new ‘shorter and simpler’ draft DC code to set out a clearer list of the expectations trustees need to meet in order to comply with their legal duties.

According to the pensions watchdog, the new code will overhaul the existing code, which was first published two years ago, to “better support” trustee boards and managers of schemes offering defined contribution benefits as they adapt to the freedoms implemented earlier this year.

The revised code comes a day after the government launched a consultation proposing a number of changes to the rules surrounding the new freedom and choice flexibilities, which were introduced just seven months ago.

Proposed changes to the rules include potentially simplifying guaranteed annuity rate (GAR) valuations, as well as requiring trustees to provide risk warnings to members wanting to use any of the new freedoms.

TPR's consultation on the new draft DC code, which began today, will run until the end of January before the DC code is laid in parliament next May, and comes into force in July. The 2013 code will remain in force until then.

Commenting on the revision, TPR executive director Andrew Warwick-Thompson acknowledged that the reforms have led to “unprecedented change” in pensions and DC schemes need to be able to adapt to ensure member outcomes remain strong.

“In this context, the draft revised DC code seeks to make the standards we expect from trustees as clear as possible. The guides that will support the new DC code will provide practical guidance to help trustees understand the different measures they can put in place to meet the standards in the code,” he said.

“During the development of the new DC code, we have engaged extensively with stakeholders, including trustees, scheme managers and advisers that form the core audience for this regulatory document.

“I now call on this audience to respond to the consultation to help ensure the code is as useful as it can be in assisting delivery of the high standards of governance and administration required to safeguard members’ retirement savings.”

The code is divided into sections and sets out expected conduct and practice in relation to the trustee board, scheme management skills, administration, investment governance, value for members and communicating and reporting.

According to the regulator, it assumes that those reading it have “good knowledge” of the legislation which applies to their scheme, and where that is not the case it urges those trustees to “undertake appropriate training, including completing the trustee toolkit, and to take professional advice”.

The regulator additionally announced intentions to consult separately on a series of ‘how to’ guides to support the new DC code in the spring.

Share Story: