The Pensions Regulator (TPR) has revised its codes of practice on pension contributions to help ensure that members of workplace pensions receive the contributions they are due.
The revised codes, which are designed to support auto-enrolment, state that employers have primary responsibility for ensuring that the correct level of contribution is paid to the scheme in a timely manner, rather than placing a "large burden" on trustees and managers, as has previously been interpreted, TPR said.
However, trustees and managers have a "fundamental role" to play to assess levels of risk regarding employers that use their scheme and emphasised that risk-based approach should be adopted when fulfilling their monitoring duties.
The maintaining contributions document outlines the processes and measures, which should be followed before trustees and managers report the late payment of contributions to TPR.
Charles Counsell, TPR executive director for automatic enrolment, said: "With automatic enrolment creating millions of new pension savers, it's more important than ever that employer and pension scheme systems are administered to support good outcomes for members.
"The risk of incorrect payments will increase as tens of thousands of new employers without experience of workplace pensions enter the market. Employers, providers, the regulator and members themselves all have a role to play in the protection of member savings."
Councell added that schemes should have a monitoring system in place, which should be proportionate and risk-based, as it will help to ensure the correct flow of the right amount of money into members' pension pots.
The regulator consulted on the codes of practice on reporting late payment contribution last year and received responses from various sections within the pensions industry.
The latest draft codes of practice and supporting guidance address the comments made in response to the consultation.
The National Association of Pension Funds (NAPF) welcomed TPR's revisions and new guidance and said that the changes are a move in the right direction.
Darren Philp, NAPF policy director, said: "Ultimately, it is the employer's duty to pay the right contributions to pension schemes and it is good that TPR recognises this explicitly.
"Additionally, we welcome the greater detail on how trustees can spot payment failures, and how regulators will respond to reports of failures. TPR rightly recognises that payment failures are a greater risk for some schemes than others, so it is important that trustees are able to focus on the risks relevant to their scheme.
"The code will still shift some responsibility for checking contributions onto trustees and scheme managers, but the revisions go some way to ensuring that the extra burdens will not be excessive."
The draft codes of practice will be presented to Parliament and the Northern Ireland Assembly. Once the process has been completed, the codes are expected to come into force in autumn 2013.
First published 07.06.2013
monique_simpson@wilmington.co.uk
