The Pension quality MARK - faqS
WHAT IS tHE pENSION quality mARK?
The Pension Quality Mark (PQM) was launched by the Pensions & Lifetime Savings Association (then the NAPF) in September 2009.
The PQM is a standard that recognises high quality defined contribution (DC) pension schemes, and helps to promote good quality DC pensions.
It is a simple benchmark that employers can use to demonstrate the value of their pension both to current and potential staff. The PQM also helps employees to understand more about their employer's pension arrangements and compare the pension schemes of different employers.
PQM is widely supported by the Government, the pensions and the HR industry.
HOW IS THE PQM BENEFITING EMPLOYERS?
The Pension Quality Mark helps employers demonstrate the value of their pension scheme to staff and enable employees to appreciate the value of the benefits it offers. It helps employers to:
• attract and retain staff
• benchmark their scheme against those of their competitors
• demonstrate they are a responsible employer
• encourage their employees to save for retirement
Employers who have qualified for the Mark are able to use the PQM logo in all scheme's communications, recruitment adverts, headed paper, etc.
HOW IS THE PQM BENEFITING EMPLOYEES?
• helps employees understand and recognise the value of the pension their employer offers and improve confidence in pensions
• encourages more employees to save for their retirement
• helps employees understand and recognise the value of the pension their employer offers
• can improve confidence in pensions
HOW IS PQM MAKING A DIFFERENCE?
As PQM's influence grows, more schemes are changing and improving in order to comply with the PQM standards. This happens in all areas - from increasing contributions, through to improving governance arrangements and communications.
WHAT ARE THE CORE STANDARDS OF THE PQM?
The three core standards that have been chosen are because they are the basic building blocks of a good quality pension scheme.
• Contributions of at least 10%, with a minimum employer contribution of 6% for the PQM. For the PQM PLUS overall contribution rates must be 15% including an employer contribution rate of 10% or more.
• Governance arrangements must be in place to ensure the scheme is operating in the best interest of members.
• Communications to members must be clear, engaging and easy-to understand.
WHY SHOULD I APPLY?
In the auto-enrolment environment it is becoming increasingly important to differentiate a good pension scheme from one offering the minimum required by regulations. PQM can be very valuable in this area.
Lots of employers tell us that PQM is great way to demonstrate that they've gone above the minimum for auto-enrolment. Having the PQM means that a scheme has higher contributions than the auto-enrolment minimum, good governance, reasonable charges and engaging communications.
WHO CAN APPLY?
The PQM is available for any defined contribution pension scheme, whether occupational, group personal pension (GPP), and stakeholder.
An application can be made by an employer, scheme manager, trustee chair, the secretary to the trustees or any adviser or consultant. Each application relates to one scheme and a specified employer. The PQM is available to any pension scheme that meets the qualifying criteria, whether they are a member of the PLSA or not.
HOW MUCH DOES IT COST TO APPLY?
There is an annual license fee of £650+VAT for smaller schemes (fewer than 500 less active scheme members) and £950+VAT for larger schemes (500 or more scheme members).
WHAT QUALITY ASSURANCES ARE THERE?
The primary means of verification will be a binding declaration by the scheme that it meets the core standards. This must be backed by the provision of supporting documents. The application and supporting documents is thoroughly checked by the PQM's assessors before the scheme can qualify.
In addition, we may: carry out compliance checks on a randomly selected schemes per year; request additional information, evidence or clarifications; note and act on any concerns about eligibility expressed by scheme members or employees representatives.
CAN THE PQM BE WITHDRAWN (AND HOW)?
Yes. There are a number of circumstances under which the PQM can be withdrawn. These include the scheme ceasing to meet the standards and the scheme being found to be in breach of regulations by the Pensions Regulator or the Financial Services Authority.
To continue to use the PQM after it had been withdrawn would mean the scheme was in breach of the terms and conditions.
DOES HAVING PQM MEAN THAT MY SCHEME AUTOMATICALLY COMPLIES WITH AUTO-ENROLMENT RULES?
No. There are specific qualifying criteria for auto-enrolment schemes. PQM has a different focus. This sets standards for very high quality DC pension schemes rather than the minimum standards set out in legislation.
CAN A SCHEME WHICH IS NOT USED FOR AUTO-ENROLMENT GET THE PQM?
Yes. A PQM scheme does not need to be used to auto-enrolment. Indeed, employers can use the PQM to differentiate between a foundation scheme used for auto-enrolment and a value added scheme that employees can opt into.
IS PQM AN INSURANCE SCHEME? IF MY PENSION FALLS BELOW EXPECTATIONS, CAN I CLAIM COMPENSATION?
The PQM is not an insurance scheme. It does not comment on nor guarantee the schemes investment performance or the amount of pension received at retirement.
WHAT IS PQM'S CORPORATE STRUCTURE?
PQM is a not-for-profit organisations wholly owned by the Pensions & Lifetime Savings Association. It is run by Board of Directors who look after strategic development of the initiative and the standards. It also acts as independent appeals panel for complex applications. The PQM Board
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In a complex industry such as pensions, both employers and employees need help to recognise high standards which initiatives like the PQM can offer.
Steve Webb, former Minister for Pensions