UK - Trustees will face member compensation claims if they fail to monitor the performance of their DC providers continually, Mercer Human Resource Consulting warns.
The advice follows a pension ombudsman determination in favour of a scheme member who accused her pension fund of failing to monitor the interest rates offered by her AVC provider with those of other providers.
Pensions ombudsman David Laverick ordered the trustees to pay “appropriate recompense” for the financial loss suffered.
Mercer senior consultant David Barker said the same principles applied to DC scheme contributions.
Barker said: “The message is clear. Trustees must monitor the continued competitiveness of providers regularly. Doing this every three years is too long.”
An annual review, he said, was frequent enough, but trustees must be prepared to take advice and act promptly if it raised concerns.
Barker also said that trustees should provide past performance information to members at regular intervals and that they should offer more than one investment option.