The Pensions Regulator's (TRP) new code of practice for trustees of defined contribution (DC) trust-based pension schemes has come into effect today.

The code sets out practical guidance on how pension trustees can meet underlying requirement of pensions legislation.

Since DC schemes are expected to become the dominant form of workplace pension provision as a result of auto enrolment, TPR said that it wants to see all consumers enrolled into well-managed schemes that can offer good outcomes.

Andrew Warwick-Thompson, TPR executive director for DC, governance and administration, said: "From today, we expect DC trustees to assess their scheme against the standards set out in the DC code.

"Our aim is to protect retirement savers and to ensure their money is invested in good quality schemes that are well-run in the members' best interests. Schemes that fall short of these standards should expect some difficult questions, and they may incur enforcement action in order to rectify breaches in pensions law.

"We also urge professional advisers to familiarise themselves with the details of the code and guidance, as they have a key role to play in helping trustees review their scheme and make improvements to its quality where necessary."

From next year, the regulator plans to undertake thematic reviews of the extent to which trust-based DC schemes are compliant with pensions legislation and associated good practice in different areas. Where necessary, it will take enforcement action to address breaches in the underlying law.

TPR has also published information to coincide with the code coming into effect, including its compliance and enforcement policy for DC casework and updated practice guidance on areas not covered by the code.

Nick Cook, Towers Watson senior consultant, said: "Increased focus on DC pension schemes has never been more crucial. The number of DC members, total DC contributions and DC assets are increasing at an exponential rate yet the level of understanding and engagement of people in DC schemes seems to remain stubbornly low.

"DC members need some help, and the Regulator's clarification today of its expectations should be the kick start that is needed to help make DC schemes better and get people further up the good outcomes ladder."

However Cook warned that the code of practice and regulatory guidance should not be seen as just a tick-box exercise.

Jan Burke, Aon Hewitt head of DC consulting, has welcomed the guidance and the "increased clarity" that it provides.

One of the key areas that the guidance focuses on is the purchase of annuities and on supporting members who make full use of the open market option. But Burke said that it was a "pity" that although the guidance acknowledges that there are other available options, it does not go into details on these areas.

First published 21.11.2013

monique_simpson@wilmington.co.uk