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Assurance over the presence of quality features will provide employers, shopping around for an automatic enrolment scheme, with assurance and confidence in the master trust sector and help them select an appropriate master trust scheme for their workers.
The consultation outlines a set of ‘control objectives’, based on many of the regulator’s DC principles and quality features. The objectives, that cover standards of practice trustees are expected to meet to deliver good member outcomes, should be underpinned by robust control procedures to help these objectives be met.
It is expected that master trusts should obtain independent assurance annually.
Andrew Warwick-Thompson, The Pensions Regulator’s executive director for DC, governance and administration, said: “Gaining independent assurance will help manage confidence in this growing segment of the DC market and demonstrate the presence of governance and administration standards that meet our DC code and regulatory guidance. We encourage employers to select master trusts that have obtained this assurance on the control objectives set out by the ICAEW. The ICAEW and the regulator have engaged with NAPF and PASA to assess how best their quality standards can dovetail with master trust assurance and these discussions continue.”
Henry Irving, head of ICAEW’s audit and assurance faculty, said: “Everybody, whether an employee or employer, wants to be confident that their pensions money is managed properly. Having an independent expert produce an assurance report can help employers assess the master trusts and effectively demonstrate that they operate to a good standard. We are consulting on the draft framework to make sure it works for practitioners, employers and master trusts. We are keen that all stakeholders take the opportunity to feed back their comments.”
The independent assurance framework focuses on six key areas:
While the framework has been developed for master trusts, other larger DC schemes may want to adopt this framework as best practice.
The consultation closes on 16 December 2013, with final guidance planned for publication in the spring of 2014.