1. What is the purpose of the PQM?
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:
- promote good quality DC pensions;
- attract and retain staff, and benchmark the scheme against the competitors';
- encourage employees to save for retirement; and
- employees understand and recognise the value of the pension their employer offers and improve confidence in pensions.
2. Why has the Pension & Lifetime Savings Association introduced this initiative?
Promoting good quality pensions has always been an important part of the Pensions & Lifetime Savings Association's work. In addition, the PQM plays an important part in rebuilding and promoting public confidence in workplace pensions.
3. How is the PQM making a difference?
The PQM is an important initiative which benefits both employers and employees. 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.
4. How is the PQM benefiting employees?
The PQM helps employees understand and recognise the value of the pension their employer offers and improve confidence in pensions. By doing this, it encourages more employees to save for their retirement, which is becoming increasingly vital.
5. How is the PQM benefiting employers?
The PQM helps employers:
- 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.
6.Who supports the PQM?
The PQM has broad support from the pensions industry, employers, employee bodies, consumer organisations and regulators such as the Pensions Regulator.
Government backing was demonstrated by Angela Eagle MP, previous Minister of State at the Department of Work and Pensions, launching the scheme in September 2009. The former Pensions Minister, Steve Webb MP, often referred to the PQM when talking about good quality pension provision.
7. Which schemes can apply?
The PQM is available for any defined contribution pension scheme, whether occupational, group personal pension (GPP), and stakeholder.
8. Who can apply?
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.
9. Is the PQM available to non-plsa members?
Yes. The PQM is available to any pension scheme that meets the qualifying criteria, whether they are a member of the PLSA or not.
10. How much does it cost to apply?
There is a one-off assessment fee of £305+VAT and an annual license fee of £405+VAT for smaller schemes (500 or less active scheme members) and £710+VAT for larger schemes (over 500 active scheme members).
11. How long does the PQM last?
The PQM has to be renewed annually. This acts as one form of quality assurance as each scheme will have to certify each year that its scheme still meets the qualifying criteria.
12. Why are defined benefit (DB) and hybrid pension schemes (HPS) not included?
As DC pension provision becomes increasingly widespread, there is a growing need for individuals to develop a better understanding of the DC pension offered to them by their employer. The PLSA therefore thought it made more sense to initially produce a PQM for DC pension schemes.
We hope to be able to launch a PQM for DB and HPS in the future.
13. What are the three core standards of the PQM?
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.
A pension scheme or employer does not need to be a member of the PLSA to apply.
14. Why have you chosen contribution rates, governance and communications as the three core standards?
The three core standards that have been chosen are because they are the basic building blocks of a good quality pension scheme.
15. 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, there are a number of other checks including:
- compliance checks on a randomly selected number of schemes per year (5-10% of schemes that already qualified)
- requests for additional information, where necessary
- responding to any concerns about eligibility expressed by scheme members or employees representatives (whistle blowing)
16. 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.
17. 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.
DC - Refers to a defined contribution pension scheme organised through an employer. This is in the form of an occupational DC scheme, a Group Personal Pension or a Group Stakeholder Pension.
PQM - The Pension Quality Mark is given to DC pension schemes that meet three core standards relating to contribution rates, governance and communications.
PQM PLUS - The Pension Quality Mark PLUS is given to a pension scheme that has overall contribution rates of 15% including an employer contribution rate of 10% or more. It must also meet the governance and communication standards of the Pension Quality Mark.
DB - refers to a defined benefit pension scheme organised through an employer where the pension received is linked to final salary.
HBS - refers to a Hybrid pension scheme which is a cross between a DB and DC scheme.
06/07/2017 - Consultation on PQM Standards read more
28/02/2017 - Sir Steve Webb and Gregg McClymont join the Pension Quality Mark Board read more
T: 020 7601 1770
We were delighted when our DC scheme was accepted, as it provides external endorsement of the quality that we offer our employees. The work we are doing in promoting the DC scheme within Michelin is having positive results, with 90% of our employees choosing to join.
Colin Porteous, Head of Pensions Compensation & Benefits, Michelin