Defined Contribution (DC) workplace pension governance
How a robust governance plan can support better retirement outcomes for your people and help achieve a better commercial return on your pension"A good governance strategy benefits everyone in your workforce"
From your younger employees who may find it hard to recognise the importance of their pension, to your people approaching retirement who are anxious about making the right retirement choices, a good governance strategy benefits everyone in your workforce. It can help you mitigate risk by demonstrating regular oversight of your workplace pension plan. This helps ensure your plan remains fit for purpose, whilst also helping you support your employees along their journey towards the life they want after work.
Adam Burn
Head of Pensions Consulting
What is pension governance?
Put simply, pension governance is the process of monitoring and reviewing the structure and appropriateness of your workplace pension plan to
ensure it is being run properly, fairly, and in the best interests of your employees and is likely to deliver suitable retirement outcomes.
As per The Pensions Regulator (TPR), the core governance elements for a DC pension plan are:
Where can governance add value?
With an estimated 7 million UK workers sleepwalking into retirement without the savings necessary to afford even a basic standard of living2, it’s clear that the retirement outcomes for many individuals within workplace pension plans are unlikely to meet their expectations. This is where good governance really shows its worth; with periodical reviews and access to key data metrics, it can provide valuable insights into what’s working and what isn’t. This can then allow you to take action to address any negative trends and mitigate any long-term risks that could potentially harm the commercial future of your organisation.
Claire Gibson DipFA Assoc CIPD MLIBF
Senior Employee Benefits Consultant
Mitigating organisational risk
Having a robust governance process, including regular reporting, can help to mitigate business risks (regulatory punishments) by supporting:
- Regulatory compliance: Ensures the scheme complies with up to-date pension legislation and regulatory requirements, reducing the risk of fines, penalties, or reputational damage.
- Operational risk control: Mitigates errors in scheme administration, such as incorrect member payments or data breaches, through clear processes and controls.
- Ongoing due diligence: Effective governance is a great way to prove that you’re conducting regular due diligence on the suitability of your pension plan.
Good outcomes for your members
As a part of your pension strategy, good pension governance can
help you deliver better member outcomes by supporting:
- Pension engagement: Understanding the value of saving and how educating your people on their pension may encourage them to invest in and interact with their pension more.
- Ongoing strategy evolution: Continuously monitoring and improving the performance of your workplace pension strategy will help ensure it remains fit-for-purpose long-term.
- Achievement of retirement aspirations: Maintaining an effective, well-governed workplace pension can help empower your people to retire how and when they want, not leave them waiting until they can.
Strengthening your pension strategy to better support your workforce’s future
A four-part webinar series exploring the key elements of your pension strategy to help you deliver a better return on investment for your business and better retirement outcomes for your people
Here to simplify the process for you
For over 20 years, we’ve been entrusted to design and manage the pension strategies of some of the UK’s most well-known businesses. Our team of over 120 UK-based professionals can help you:
- Establish, attend and manage your Pension Governance Committee (PGC).
- Regularly review your workplace pension scheme to enable you to evidence to employees that the scheme continues to be an appropriate vehicle for their retirement savings.
- Create a formal process for the delivery of information in relation to future legislative requirements.
- Formulate future decisions in respect of plan structure and support in order to try to deliver the best member outcomes possible.
Martin Parish
Regional Director - Employee Benefits
Download our guide DC pension governance
In our employers guide to DC pension governance, we clarify the key aspects of how a robust plan can support better retirement outcomes for your people and help achieve a better commercial return on your pension costs.
We’ve created this guide to help you understand:
- The core elements of pension governance
- The value of good governance, both commercially and for your employees
- The qualities of a governance strategy and structure that can help you deliver better pension outcomes for your people and business
NFP are here to simplify the pension governance process for you
For over 20 years, we’ve been entrusted to design and manage the pension strategies of some of the UK’s most well-known businesses. As part of the Aon group, our team of over 120 UK-based professionals can equip you with access to data analytics, tools and insights often reserved for larger businesses.
Fundamentally, we understand how much time, resource and expertise it can take to implement and manage a robust governance strategy. Among the numerous other considerations, what does ‘good’ actually look like, and how do you look to achieve this without specialist support?
- Establish, attend and manage your Pension Governance Committee (PGC).
- Regularly review your workplace pension scheme to enable you to evidence to employees that the scheme continues to be an appropriate vehicle for their retirement savings.
- Create a formal process for the delivery of information in relation to future legislative requirements.
- Formulate future decisions in respect of plan structure and support in order to try to deliver the best member outcomes possible.
Request a chat with one of our governance specialists
To discuss your needs and how we can help you implement a governance plan that ensures your pension is performing in the best interests of your people, supporting your objectives and delivering good outcomes for your members, get in touch with one of our specialists.