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DC Code of Practice

On 28th July 2016 a revised DC code of practice (DC code) came into force addressing reforms to legislation since the first DC code of practice was published in 2013. The new DC code applies to trustee boards of all occupational trust based pension schemes with two or more members (active, deferred or pensioner) which offer money purchase benefits. This includes;
  • DC schemes and DC sections within schemes offering mixed benefits, including money purchase additional voluntary contributions (AVCs) within occupational defined benefit (DB) schemes 
  • money purchase benefits with a DB underpin
  • money purchase underpin benefits where these are provided by a scheme, insofar as the relevant legislation applies to them.
The new DC code does not apply to schemes offering only defined benefits and it also does not apply to work-based personal pensions, stakeholder schemes or other contract-based DC schemes.
The Pension Regulator’s approach to the regulation of DC schemes is to support the market in delivering good member outcomes, intervening only where the market appears unlikely to do so unaided. 
The Regulator has set out four key risks to DC pensions including poor standards of governance; poor investment governance and inadequate controls; poor administration practices; scams and the misappropriation of scheme assets. The new DC codes aims to help trustees address these risks to ensure DC schemes deliver good member outcomes.
The new DC code maintains a requirement for trustees to have an understanding of how all aspects of their DC schemes are run however there is no legal obligation to abide by the new DC code. It is merely designed as a suggested approach to the governance and administration of DC schemes and alternative approaches can be applied as long as they abide by the laws affecting DC schemes.