New requirements for DC pension schemes

Delivering value and consolidation

Phil Spary, Director, Pension Funds

The government is introducing some further, wide reaching requirements for certain relevant schemes which offer money purchase benefits. These changes are likely to result in a shift in the current DC landscape, as more DC trust based schemes are expected to transfer to master trusts.


As noted in their consultation response, a number of profound changes will be enacted in amended regulations which will come into force on 5 October 2021; these new requirements will apply for scheme years commencing after 5 October 2021.

These new requirements continue the government approach as they describe it, to tackling persistent underperformance and poor governance, accelerating the pace with which the market is consolidating and bringing the benefits of scale to all scheme members, including a greater capacity to take advantage of illiquid and other alternative investment classes.

As noted by DWP, the proposed regulations will require new value for member assessments for those relevant DC schemes, with less than £100 million in total assets, which have been operating for at least three years at the end of the previous scheme year from when their chair’s statement falls due.

For this new category of DC schemes, referred to in regulations as ‘specified schemes’, Trustees must carry out a holistic assessment of how their scheme delivers value for members. The outcome of this assessment must be reported in the annual chair’s statement and include consideration of reported costs and charges, fund performance (investment returns) and other measures of scheme governance and administration.

What is changing?

The proposed amendments to The Occupational Pension Schemes (Scheme Administration) Regulations 1996 (the Administration Regulations 1996), Register of Occupational and Personal Pension Schemes Regulations 2005 and The Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013 are expected to require:

  • all relevant schemes to report on the return on investments of default and member selected funds
  • schemes with assets below £100 million to report on how their scheme presents value for members, taking into account costs and charges, investment returns and various elements of governance and administration
  • schemes with assets below £100 million that do not present value for members to report this outcome in their scheme return
  • all relevant schemes to report to the Pensions Regulator the total amount of assets held in the scheme in the annual scheme return.

Actions for Trustees

Where these smaller schemes do not demonstrate value for members under the new assessment, Trustees should take immediate steps to wind up the scheme and consolidate members into a larger scheme unless, in exceptional circumstances, they can improve both rapidly and cost effectively.

With these changes in mind, and with continued focus on driving up standards of governance in order to deliver better outcomes for members, it is vitally important that Trustees of relevant schemes consider the implications of these new standards now. Additional guidance has been published by the DWP, and we would encourage Trustees to consider the wide reaching disclosure requirements immediately in readiness for prescribed implementation dates.

How Crowe can help

To discuss this matter further, please contact our Head of Pension Funds, Andrew Penketh or your usual Crowe contact.

Contact us

Andrew Penketh
Andrew Penketh
Head of Pension Funds