Companies will have to ensure that their employees choose the most appropriate savings options once automatically enrolled into a pension scheme, under a set of proposals published by The Pensions Regulator (TPR).
TPR has set out six principals and 31 guidelines that employers must follow when auto-enrolling employees into pension schemes.
The new guidance will put the onus on pension companies and trustees to make sure their defined contribution (DC) schemes are well run and inform employees about their annuity options.
Bill Galvin, TPR chief executive, said: ‘We expect schemes to demonstrate how they will comply with our principles for good DC schemes and this will give employers reassurance about their choice of scheme.’
‘Members bear risks where DC schemes perform poorly. Many members will not have any experience of DC pension saving, so it's vital that schemes are run by capable people who act in members' interests - from enrolment to retirement.’
Martin Wheatley, FSA managing director and chief executive designate of the Financial Conduct Authority (FCA), said: ‘We welcome this publication from TPR, and are pleased that the initial analysis confirms that there is good alignment between the regulator's quality features and our requirements.’