A guide to help trustees explore the level of protection in place for DC assets has been launched.

The guide, by The Security of DC Assets Working Party, aims to provide a framework, as well as give trustees of DC schemes a steer on the questions to ask advisers such as investment consultants and lawyers.

It also highlights key areas to explore when seeking to change platform provider or fund managers.

Chair of the Working Party, Barry Parr, said the issue of security of DC assets is one that is likely to grow in prominence, citing three main reasons:

"First, increasing numbers of people are now members of DC schemes with a corresponding rise in DC assets," he said.

"Second, we've seen a significant growth in the number of master trust arrangements and third, it's a requirement for trustees to understand this issue as part of their assessment against the Pensions Regulator's Code of Practice 13."

Parr said the Working Party was set up to get more clarity and help trustees understand what questions they should ask, because the new draft code requires not only understanding but also that assessments are shared with employers and members.

The party has worked closely with a number industry bodies, including the Pensions Regulator and the FCA.

Anna Copestake, senior associate at Sackers & Partners LLP and member of the Working Party, added: "The first DC Code of Practice 13 stated that trustees should understand the levels of protection in place for DC assets and many trustees assume that the assets of DC scheme members are covered by the Financial Services Compensation Scheme (FSCS), but that may not be the case.

"The levels of protection in place for members will depend on a number of factors, including whether funds are held directly on a platform or whether they are set up as 'insured life' funds or structures such as open ended investment companies (OEICs).

"The more we looked at it, the more complex the issue became and we hope this framework will prove invaluable," she said.

First published 11.02.2016

Lindsay.Sharman@wilmingtonplc.com