UK - There is an "overwhelming consensus" among the industry that costs in defined contribution schemes should be clear, simple and comparable, the UK Pensions Regulator says.
Responding to its discussion paper on delivering good outcomes for DC members, published today, the watchdog hinted it would refine the requirements around disclosure of costs and charges in DC schemes to help employers and members better judge value for money.
It said: “We would like to see all pension schemes and service providers focusing more closely on the value they offer to employers and ultimately individual members. This includes increasing awareness of the impact of charges through the disclosure of fees and costs in a clear, transparent and comparable way.”
It added there is a “clear opportunity” for the industry to voluntarily provide a template that can be used across all DC provision to enable better comparability of value for money.
TPR executive director of DC, governance and administration June Mulroy (pictured) said: “Without positive action by everyone involved with DC pensions, we do not believe the current market will always support members to achieve a good outcome from their savings.”
Elsewhere, TPR said accountability for decision making in DC schemes should be clear and recorded throughout the lifecycle of the scheme something which could be achieved through the introduction of an accountability framework.
It also said it may establish a kite-marking initiative, or industry accreditation, for DC schemes to signpost good provision to employers and members.
In addition, many respondents felt TPR had been too negative towards multi-employer schemes and that the benefits gained from the schemes outweigh the concerns.
TPR vowed to probe the structures, in particular the management of potential conflicts of interest between the trustee and the provider.
TPR will publish a more detailed response in autumn setting out how it will update its DC regulatory approach to mitigate risks to members.
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