Don't limit DC savers' choice, respondents say

They also answered questions on whether compliance the master trust authorisation regime was distracting from improvements to member outcomes, and if auto-enrolment has been successful seven years after it was introduced.

See the results in full.

Defined contribution (DC) should not be given more limited choices, such as on investment strategies and at-retirement products, a majority (55%) of this week's 93 Pensions Buzz respondent said.

Refuting the suggestion from the Organisation for Economic Co-operation and Development, one commentator argued: "Choice allows people to tailor their retirement. It would be a better solution to help people deal with the choices they need to make than take them away."

Another suggested what was needed was more knowledge and better tools to make decisions, while others said it was important that the default was adequate.

"There should be a wide range of self-select options for DC members, allowing engaged investors to access different asset classes and funds with differing levels of risk and reward," a further respondent said.

However, three in ten agreed with the idea, with one arguing: "Choice is important, but too much choice stops/defers decisions. Simple, well-defined choices generally work better than a long list, at which point numerous studies show that people for the first listed choice or stick with a default."

Survey participants were almost equally split on whether master trust authorisation had driven the focus away from improving member outcomes and towards compliance.

Those who agreed amounted to 28%, while 32% took the opposite view. Of the latter, one argued it did not appear so: "The ‘good' and well-structured/managed providers will have been fully complying with the governance in any event."

Another added: "Spending time getting the foundations right for a lifetime project is time well spent."

Conversely, one commentator said: "There is a danger that the supervision regime may swamp the real business of running a master trust for the benefit of members. Compliance is necessary but not sufficient for good outcomes."

 A further respondent decried red tape, and another added: "[Compliance] often detracts from getting a better outcome ‘just in case we get it wrong and we don't want to do that because that will cost us money'."

A majority (56%) agreed that auto-enrolment (AE) has been a success, following its seventh birthday on 1 October, although several caveated their response.

For example, one respondent said: "AE has greatly increased the number of workers in workplace pension schemes, which does make it a success. However, it's still not enough to ensure people can have a comfortable retirement income."

"Millions of people have been put into pensions and are saving for retirement," another stated. "Opt-out rates are low. Great success. Now we need to get contribution rates up."

A further respondent said there was "room for improvement but something to be proud of".

Three in ten participants felt it was too early to know, however, with many stating it may be decades until this is truly understood.

"It has gone as expected," one respondent proffered. "Whether it will lead to good outcome sin retirement is yet to be seen and will depend on what happens to contribution rates."

Another argued small contributions meant some savers were "sleepwalking" to pensionable age.

Almost three in five (57%) respondents agreed the government must now set out plans to increase contributions up to 16% of earnings, while 18% said this should be at another level.

Of the former group, one suggested a 1% increase per annum over the next eight years, while another said there was a need "to make progress but be aware of minimum wage requirements".

Another argued it was an "essential requirement for government to tell the truth to their electorate", suggesting the current level gives the impression to savers that they are saving enough for retirement.

 Of those who suggested a different total contribution rate, the possibilities ranged from 10% to 15%, although most people opted for a level of 12%.

Whatever it is set at, one respondent said: "The key will be to do it gradually so as not to discourage employees and employers".

"There is no point in just picking a higher number from time to time," another argued. "Work needs to be done to calculate a realistic figure that provides an adequate level of income."

The largest number of respondents (44%) were unsure whether the GMP Equalisation Working Group's methodology guidance provided enough clarity to help schemes with the process.

But one such respondent was grateful for the efforts being made to support trustees: "It's as useful as anything but it's not gospel. That said, everyone involved in this should be thanked."

Nevertheless, 33% felt there was not yet enough clarity, with one arguing that many professionals had not "fully grasped what is required".

Others noted that there were still unresolved issues arising out of the Lloyds case, with a follow-up hearing expected next year. "There is still the thorny issue of transfers in and out to resolve," one said.

"It provides comfort that what they are doing follows government expectation rather than clarity," another added.

One of those among the 23% who felt there was enough clarity said: "As the guidance said, there is more guidance needed - especially from HM Revenue & Customs."

"As far as it goes," a final respondent said. "There are still too many unknowns."

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• Topics
• Industry
• Pensions Buzz
• Organisation for Economic Co-operation and Development
• GMP Equalisation Working Group
• GMP Equalisation
• GMP Conversion
• gmps
• Guaranteed Minimum Pension
• master trust authorisation and supervision regime
• master trust authorisation
• master trusts
• The Pensions Regulator
• TPR
• Auto-enrolment
• AE
• gmpewg