PLSA publishes template for DC chair's statements

DC schemes are required by law to produce an annual governance statement in their annual report that illustrates, among other things, the scheme's investment strategy and its governance; the processing of core financial transactions; the disclosure of member-borne transaction costs and charges; the assessment of value for members; and how the trustees have met trustee knowledge and understanding requirements.

The PLSA said it had worked with a number of legal firms and advisers to design a template statement, which is appropriate for standard occupational DC pension schemes, following concerns from its members about how some of the legislative requirements regarding the statement are being applied in practice.

It said the template is based on the requirements of regulation 23 of The Occupational Pension Schemes (Scheme Administration) Regulations 1996 as at 1 February 2020 and is designed to be used in conjunction with The Pensions Regulator's (TPR) detailed guidance and quick guide.

The template is designed to help trustees complete their statement though the PLSA noted individual schemes will need to give due consideration to their circumstances to meet the statutory requirements and added schemes should continue to consult their own advisers as part of this process.

The production of the template has been supported by TPR and is available for trustees via the PLSA website.

PLSA DC committee chair Laura Myers said: "This has long been a concern for trustees and that's why I am delighted to have contributed to this template statement. It will hopefully provide a useful starting point and guide for trustees to help simplify the production time and cost on documenting their governance so they can instead focus these costs on the areas that will make tangible improvements to members' outcomes."

TPR executive director of regulatory policy, analysis and advice David Fairs added: "A chair's statement is a basic requirement of good pensions governance and should be written clearly enough for members to understand and so I welcome any assistance provided to the trustees such as the PLSA's drafting template.

"The template doesn't remove the need for trustees to carry out the fundamental analysis forming the foundation for a chair's statement or consider how the statement requirements apply in the case of their scheme, but it should help in collating the information needed and help to present this clearly to savers."

The template was produced with the assistance of the PLSA's DC governance group, with contributions from the people including:

• Helen Ball, Sackers
• Mark Baker, Pinsent Masons
• Francois Barker, Eversheds Sutherland
• Anna Copestake, ARC Pensions Law
• Charlotte Feld, Travers Smith
• Laura Myers, Lane Clark & Peacock
• Rona Train, Hymans Robertson

Sackers head of DC Helen Ball said: "This template will hopefully provide a useful starting point for any trustees who are uncertain of how they should meet the governance requirements, and should help to reduce the production time and costs associated with their statements.  It is not intended to replace the good work done by many schemes over the past few years in forming their own chair's statement "style", but this will be a really useful tool to supplement and support it."

Arc Pensions Law partner Anna Copestake added: "DC chair's statements eat up a depressing amount of trustee time and budget. Hopefully the template will make the process less costly all round. It provides a useful checklist for gathering the information to be reported as well as a framework for presenting it. It would be wonderful if it enabled trustees to redirect resources to furthering member outcomes. You can't escape the fact that it would need tailoring, but as one supermarket once said, ‘every little helps'.

"That said, it's not a magic bullet to some of the pain caused by the chair statement regime. The mandatory penalty for any form of non-compliance remains an obstacle to delivering value for members through this governance initiative."