OREANDA-NEWS. Aon plc (NYSE:AON), welcomes the consultation on the DC Code released by the Pensions Regulator today.

The new proposed DC Code helpfully moves to a principles-based approach and away from the detail of the 31 quality features. This allows the code to provide clarity, separate legislative requirements and best practice guidance. The detail will be in the supporting guidance documents that we expect to see from the Regulator in the Spring.

However, what the proposed DC Code does not do is provide practical help to schemes on how to judge value for money for members. The Aon DC Survey 2015, also released today, shows that 57% of respondents are seeking better member outcomes in their DC business plans, but struggling with how to deliver on this in practice.

Sophia Singleton, partner and head of DC Consulting at Aon Hewitt, said:
"What trustees are looking for right now is practical support with how to complete their Chairman's Statement, and in particular, how to assess value for members. This draft Code does not achieve that. The draft Code itself has taken a step back to cover the issues at a higher level, so I am looking for significantly more detail from the Pensions Regulator in the guidance in the Spring."  

Sophia Singleton continued:
“The other area that isn’t covered is how members access the new flexibilities. Making the right decisions and choosing the right product can potentially have a significant impact on a member’s outcome. Our survey shows that 43% of schemes are either developing a preferred drawdown solution or have already put one in place. This is a crucial area where trustees need guidance”.

There are also the ongoing discrepancies between the requirements for trust-based schemes, regulated by the Pensions Regulator, and those for contract-based schemes, regulated by the Financial Conduct Authority (FCA). The draft Code helps level the playing field. For example, the Pensions Regulator has made it clear that 'value for members' is consistent with 'value for money' which is the term the FCA uses.

Debbie Falvey, Debbie Falvey DC Proposition leader at Aon Employee Benefits, said:
"Most members do not know if they are in a trust-based or contract-based scheme, what they want are better default outcomes. Although the draft Code provides the principles to help achieve this for trust-based schemes I would welcome anything that brings the two regimes closer together."