Pensions Regulator Updates Trustee Guidance On Active Member Discounts In DC Schemes – Charges, Mortgages, Indemnities

The Regulator has updated its scheme management detailed guidance for trustees of DC schemes in
relation to the prohibition on giving charging discounts for active
members.

Since April 6, 2016, trustees of occupational DC schemes used as
qualifying schemes for auto-enrolment have been barred from
imposing higher charges on non-active members compared to actives.
The Regulator’s guidance note Value for DC scheme members sets
out the prohibition and explains how it works in practice. Among
other things, the guidance advises trustees that if they are unsure
whether their scheme provides for an active member discount, they
should compare the rate and/or level of charges imposed on a
non-contributing member to those that the member would have faced
if they were a contributing member.

To provide further clarification about how this test should be
approached, the following additional wording has now been
added:

“The existence of an active member discount needs to be
checked at an individual member level, as opposed to a cohort
level, and you need to be satisfied that there is no individual
member affected by an active member discount. This is an ongoing
obligation and active member discounts cannot occur at any
time.”

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.