Defined Contribution Pension Scheme Chair's Statement: How To Avoid A Fine

Background - the Pensions Regulator's powers and use

Trustees of 'relevant schemes' providing defined contribution (DC) benefits must prepare a chair's statement containing prescribed information within seven months of the end of the scheme year. The statement covers four specific areas:

1. governance of the default arrangement;
2. the processing of core financial transactions;
3. charges and transaction costs (including value for members); and
4. trustee knowledge and understanding.

Failure to prepare a compliant chair's statement attracts a mandatory penalty levied by the Pensions Regulator (TPR) of between £500 and £2,000. In Q3 2019, TPR imposed 28 such penalties.

TPR's published policy states that a scheme with a professional trustee will receive the maximum penalty of £2,000. Where there is no professional trustee, the minimum £500 penalty will, subject to the £2,000 cap, increase by 10p per member with money purchase benefits, and the total will double