UK – The UK regulator's proposed defined contribution (DC) code of practice has been criticised for its "excessive" level of detail and being too prescriptive.
Responding to the recent consultation that also proposed stricter regulation of master trusts in the country, the National Association of Pension Funds (NAPF) argued for a "slimmer, objective-based code" that sought to compile all of a DC trustee's duties.
The pension association was highly critical of the Pensions Regulator's (TPR) decision to employ prescriptive terms such as "trustees must" and "trustees should" – arguing that many trustees would not distinguish between the two and the code would "place a substantial new burden on schemes".
"The longer and more prescriptive the Code, the harder it will be for trustees to implement fully," it said.
Darren Philp, the organisation's director of policy, added: "We are also concerned that this code risks being counterproductive.
"This code is highly prescriptive and, by focusing on only trust-based schemes, there is a danger that companies offering these pensions will decide to drop them in favour of contract-based pensions, which may not be in the members' best interest."
The focus on trust-based schemes is presumably the result of contract-based arrangements being regulated by the Financial Services Authority, split from this week into the Financial Conduct Authority and Prudential Regulation Authority.
Law firm Sackers seconded the NAPF's criticism that the proposed code was too detailed.
Partner Paul Phillips said: "In our view, the draft code is both too long and too detailed to achieve its twin objectives of providing practical guidance on the exercise of DC functions in pensions legislation and the standards of conduct required in a meaningful way."
The NAPF further criticised attempts to regulate master trusts, saying that a proposed independent audit would involve costs that were "likely to be passed onto scheme members".
The organisation said that the regulator should continually review its notion of master trust regulation.
"If, as both TPR and the NAPF expect, there is consolidation in this segment of the market as automatic enrolment progresses," it said, "it may be possible to change the requirement for independent assessment.
The consultation concluded: "In a world where there are fewer, larger pension schemes, it may be possible for TPR to assess Master Trusts itself."