29 October 2009 – Publication of DWP research report: 'The Economic Basis for the Regulation of Pensions'
Research is published today by the Department for Work and Pensions on the economic framework underpinning the regulation of occupational pensions.
The report provides a review of the different types of pension plan, the main regulations that affect them and a review of what the regulations are designed to achieve.
The authors identify three broad areas of regulation applicable to pensions: information, prudential regulation, and product design.
The authors developed the following principles which they believe should underlie the regulation of pensions:
- any pension design should be simple enough so that it can be easily understood by employees;
- members must be informed in objective terms about the benefits and risks of the scheme when they enrol;
- joining an occupational pension scheme should be financially beneficial for almost all employees so they can be safely enrolled without financial advice;
- employers must have no direct commercial interest in the employee’s participation; and
- the scheme must meet high solvency standards so that promised benefits can be paid with a high degree of probability, even if the sponsor fails and the scheme closes.
- These standards should be at least as strong as those offered by insurance companies.
Notes for Editors:
- 'The Economic Basis for the Regulation of Pensions' will be published in the DWP research report series.
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