Irish defined contribution (DC) pension schemes must demonstrate they are providing value for money to their members and being encouraged to benchmark themselves against peers in a new code drafted by the Pensions Authority.

The codes of governance for DC funds, published after the regulator launched a consultation on minimum quality standards in 2013, urged value for money to be included on a regularly updated register of scheme risks.

Other principles outlined by the Authority included how trustees should engage with investment managers, how member communication should be structured and the demand that all risks – including costs, investments, regulation and fraud – be captured in a comprehensive risk-management plan.

In general statements on risk, the Authority noted that, where they were so severe they could threaten the future of the scheme, trustees should decide what steps to take to limit the impact.

“This may involve reducing the likelihood or the impact of the risk arising or deciding on the steps that will be taken if the risk comes to pass,” according to the draft code.

The Authority included value for money among the risks pension trustees should monitor and said that, while there was no common definition of what amounted to good value, value would only be provided where the service and benefits were better than that provided by other schemes – placing the onus on funds to reduce costs if they are an outlier within the industry.

Without explicitly mentioning it, the emphasis on costs is in line with both the Irish government’s agenda for DC and the Authority’s desire to see the market consolidate and achieve scale.

Brendan Kennedy, head of the Authority, has previously spoken of his desire to see the number of DC funds fall to around 100.

The recently formed Pensions Council is currently looking at ways to tackle costs among pension providers in Ireland.

The Authority has put the codes out to consultation, asking for responses by 16 June.