About PQM REady Standards
1.What are the core PQM READY standards?
To quality for PQM READY, multi-employer schemes must meet the standards on governance and communications.
The PQM READY standards have tough rules on governance. Trustees must have the power to make, break or vary arrangements with the scheme's fund managers and administrators.
It is important that trustees are independent. This means that neither the trustees nor any company associated with them can have a commercial interest in the scheme. Independent trustees need to be in the majority or have a casting vote. The main trustee body must be chaired by an independent trustee.
Trustees must also undertake training in line with the Pensions Regulator's Code on Trustee Knowledge and Understanding . Trustees have to regularly review key DC issues at their meetings.
All employers using the scheme must be able to access a default investment option with charges no higher than 0.75%. We appreciate that some employers may opt for a more expensive default, but if they do so it must be their own choice. The scheme needs to offer a simple range of investment options or a default option.
On communications, schemes must have clear and engaging communications for members who join the scheme, on an ongoing basis and for members approaching retirement.
2.Why is the contributions standard not applicable?
In most cases, the scheme will not set the level of contributions. They will be set by the employer. So it would not be appropriate to assess the master trust on the level of contributions and pensionable pay.
Contributions are covered under the classic PQM, which remains the reserve of employers. Only classic PQM can be communicated to employees. Employers using a PQM READY master trust can easily qualify for classic PQM by meeting the contribution standard and they will pay a reduced assessment fee.
3.What does 'independent' mean in terms of the trustee?
We are looking for at least half of trustees, and the trustee chairman, to be independent of any organisation with a commercial interest in the scheme (beyond any interest from being a trustee or member). This is aimed at ensuring the trustees can always act in the members' interests and independently of any commercial sponsor or founder. We would not normally regard participating employers or their employees as having a commercial interest. Independent trustees do not have to come from a professional trustee company.
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02/10/2017 - PQM Launch Good Communications Guide read more
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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