Nabarro Clarity Guide: governance and administration of trust-based DC schemes

Welcome to our 10th Nabarro Clarity Guide. The Pensions Regulator has laid its revised draft code of practice on the governance and administration of trust-based DC schemes before parliament and it is due to come into force in November 2013. The code will also be accompanied by DC regulatory guidance and DC compliance and enforcement policy. The code sets out the features the Regulator expects in a quality scheme and sets out five core areas of scheme governance. The Regulator suggests that trustees work through each section systematically and assess their scheme’s compliance with the code. This Clarity Guide summarises the key features of a quality scheme listed in the code and refers to some of the practical tips for trustees included the code.

The code applies to trustees of all DC trust-based schemes. It also applies to money purchase benefit sections (including AVCs) in DB schemes, the DC element of hybrid schemes and DC schemes with a DB underpin. The code does not apply to DB schemes, DB benefits in hybrid schemes, work-based personal pensions, stakeholder schemes or other contract-based schemes.

Trustees should read the code and the accompanying guidance and policy when it comes into force in November. Trustees should consider if their scheme complies with the code and, if not, make appropriate changes. Compliance with the code is not mandatory, but trustees should be able to explain how their approach to scheme governance complies with the code and, if not, be able to justify any departure from the code…

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