Employee benefit consultancy Xafinity has slammed the DWP's review of regulation around trust-based pension schemes.
The DWP last week launched a review into the differences between regulation of trust-based occupational pension schemes and contract-based workplace personal pension schemes.
Pensions minister Steve Webb says the department is particularly concerned about the effect of short-service refund rules on pension savings.
Currently, members of trust-based pension schemes who leave their job within two years may have their contributions refunded. If the member takes their refund, the employer can keep its own contributions to the member's pension in the trust to help pay for future administrative costs or contributions to other pensions.
Commenting on the review, Xafinity head of defined contribution (DC) solutions Ken Anderson (pictured) says: "The lobbying against certain aspects of trust-based schemes appears to ignore the significantly higher levels of support and governance requirements of these arrangements, relative to contract-based schemes.
"If a member of a trust-based scheme ceases to contribute, legislation requires the trustees to continue to look after the member's benefits and not to treat the member any differently than if they had continued to contribute to the scheme.
"Conversely, if a member of a contract-based scheme ceases to contribute, there are neither trustees nor other mandatory governance structures in place to support the member. Further, the fees that their pension pot is subject to can increase substantially just because they have ceased to contribute."
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