Minimum governance standards for DC trust-based schemes: impact assessment

Document type
Impact Assessment
Corporate author(s)
Great Britain. Department for Work and Pensions
Publisher
DWP
Date of publication
16 September 2014
Subject(s)
Poverty Alleviation Welfare Benefits and Financial Inclusion
Collection
Social welfare
Material type
Reports

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Automatic enrolment will generate an extra £11 billion a year in pension savings from around six to nine million people newly saving or saving more into a pension. In most cases people will be automatically enrolled into a defined-contribution (DC) pension scheme. These schemes must deliver the best possible value for money and good retirement outcomes for scheme members. The 2013 Office of Fair Trading (OFT) DC market study found that competition alone cannot be relied upon to drive value for money in the DC workplace pension market due to weaknesses in the buyer side of the market and the complexity of the product. Government intervention is necessary to ensure all individuals saving into a workplace pension get value for money, protecting members from consumer detriment. In the absence of minimum governance standards set out in legislation the risk of a market investigation by the Competition and Markets Authority would be likely to create uncertainty, disruption, costs and reputational damage to the pensions industry. This Impact assessment focuses on minimum governance standards for DC trust-based schemes only.

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