Pension savers should check that their scheme is not underperforming, the Pensions Regulator (TPR) has warned.
The warning followed the publication of a consultation paper by the TPR, which highlights the problem of badly run pension schemes.
According to the TPR, the trustee model can be made more effective to reduce the number of poorly governed pension schemes. Poorly run schemes must ‘improve or consolidate to address their governance issues’, it adds.
Commenting on the paper, David Fairs, Executive Director of Regulatory Policy, Analysis and Advice at the TPR, said: ‘We believe all savers should be in well-run schemes that deliver good value. This paper outlines how we are considering changing the way we regulate to achieve that.
‘The trustee model isn’t broken, but it does need to be greatly improved. There is stark evidence that the current system doesn’t work for all and there is a clear disparity between the experience of savers in well-run and badly run schemes.
‘If trustees cannot meet the standards we expect, we believe they should wind up and consolidate savers into a better run scheme.’
The TPR raises several issues for pension schemes, including how to improve trustee knowledge and understanding. It also says schemes should encourage diversity on boards; questions whether sole trustees are able to govern effectively; and asks if there should be an accredited professional trustee on every board.
The consultation, which closes on 24 September, also looks at the ways in which barriers to consolidation could be removed.