UK financial regulators to tighten scrutiny of pension scheme providers
11 Jan 2013
UK financial watchdogs intend to tighten scrutiny of companies that offer pension schemes to nearly 8 million people who would be automatically enrolled into a workplace savings plan following a government campaign.
The Pensions Regulator and the Financial Services Authority (FSA) launched a consultation yesterday for money purchase pension plans - known as "defined contribution" (DC) schemes as they planned to introduce a tighter regulatory regime and a Code of Practice for UK companies to follow.
The government-backed auto-enrolment scheme, which required people to opt out rather than opt in to retirement saving, could lead to the signing up of 5-8 million additional workers and pensions that would likely be DC pensions.
According to the pensions regulator, it could not be assumed that they would be engaged investors or that they would take control of their savings once they had been automatically enrolled.
Business lobby groups and pension trade bodies have issued warnings about over-regulated pension schemes.
According to the Confederation of British Industry (CBI), over-regulation damaged final salary-linked pension plans when the government required all such pensions to become index-linked to inflation in 1997, adding extra service costs.