If you set up new pension schemes for your clients, make sure that they meet certain criteria. You will probably need to register the scheme with us.
You should ensure that schemes meet the needs of employers and their staff.
Key points
- Register new schemes with us if necessary.
- Most employers are likely to choose a defined contribution (DC) scheme such as a group personal pension or master trust.
- Schemes used for automatic enrolment must meet certain legal criteria.
- DC schemes must meet certain standards.
Registering schemes
It’s a legal requirement for all work-based pension schemes that are registered with HM Revenue and Customs (HMRC) and have more than one member to also register with The Pensions Regulator (TPR).
See register a pension scheme for more information.
Types of scheme
There are a number of different types of pension arrangement including defined contribution (DC), defined benefit (DB) and hybrid schemes.
The most likely choice of scheme for many employers will be a DC scheme such as a group personal pension or master trust. As these schemes are usually run by large, specialist pension providers they should cost less and require less input from employers.
We are encouraging employers with fewer than 1,000 workers who will only be paying the minimum legal contribution rate required for automatic enrolment to question any recommendation that they set up a new trust-based pension scheme for their workers. The majority of small or medium sized employers will not benefit from setting up a trust-based scheme as they are generally unable to devote a high level of money and time to running the scheme.
Automatic enrolment criteria
You must ensure that schemes you set up for automatic enrolment meet certain legal criteria.
Detailed guidance 4: Pension schemes
You also need to ensure that default arrangements in DC schemes which are being used to comply with automatic enrolment duties meet the required charge controls. For more information, see our guidance for trustees on the DC charge controls.
DC schemes
Trust-based DC schemes need to comply with certain legal requirements and meet the standards set out in our code of practice.
Master trusts are also required to obtain authorisation.
Group personal pensions are regulated by the Financial Conduct Authority and must meet their standards.
Quality criteria
There are certain key areas to consider when helping a client to choose a pension scheme.