Defined contribution pension plan sponsors will have to do more to receive a stamp of approval from the National Association of Pension Funds.
The U.K.'s pension industry trade organization has revised the standards necessary for a DC plan to achieve a Pension Quality Mark — a standard that recognizes high-quality DC plans and is designed to help employers show their plan is of good quality.
The new standard, which PQM-qualified plans must implement by the first renewal of their status after April 2016, outlines “good practice” processes that plans must follow when setting, monitoring and reviewing the default fund's investment objectives. The new standard also requires documented objectives of the default investment strategy every three years or more often, as well as regular monitoring and formal review by trustees, governance committee or through the sponsoring company's own annual plan review.
About 200 pension funds, covering about 330,000 active plan participants, have received the PQM or PQM PLUS since the launch of the initiative in 2009.
To qualify for PQM, a plan's total contributions must equal at least 10% of an employee's pensionable salary, with a minimum employer contribution of 6%. For PQM PLUS, total contributions must be at least 15%, with the employer contributing at least 10%.