Tougher regulation has focused on two key areas in UK DC pensions—more robust governance of pension plans, and demonstrable value for money (VFM) for members. Both of these priority areas align naturally with the TDF approach.
- By investing each member's account into an appropriate TDF, fiduciaries can ensure there is full transparency into the underlying investments, including attribution of returns, risk and costs—both at the plan and the individual member level. This creates the basis for truly effective governance of the plan investments.
- With TDFs, because each member's investments are invested in a single professionally managed fund through to the point of retirement, there is no need for continuous switching between different investment vehicles. This eliminates both large numbers of unnecessary transactions and the costs, risks and administrative effort that go with them.
In short, TDFs create the opportunity to revolutionize pension plan governance and administration and so create better outcomes for members. The question is, where does that leave the consultants?
For Investment Professionals only. Not for inspection by, distribution or quotation to, the general public.
Past performance does not guarantee future results. The value of an investment can go down as well as up and investors may not get back the full amount they invested. Before making an investment, investors should consult their financial advisor.
Note to All Readers: The information contained here reflects the views of AllianceBernstein L.P. or its affiliates and sources it believes are reliable as of the date of this publication. AllianceBernstein L.P. makes no representations or warranties concerning the accuracy of any data. There is no guarantee that any projection, forecast or opinion in this material will be realized. Past performance does not guarantee future results. The views expressed here may change at any time after the date of this publication. This document is for informational purposes only and does not constitute investment advice. AllianceBernstein L.P. does not provide tax, legal or accounting advice. It does not take an investor's personal investment objectives or financial situation into account; investors should discuss their individual circumstances with appropriate professionals before making any decisions. This information should not be construed as sales or marketing material or an offer or solicitation for the purchase or sale of any financial instrument, product or service sponsored by AB or its affiliates. Note to Readers in Europe: This information is issued by AllianceBernstein Limited, a company registered in England under company number 2551144. AllianceBernstein Limited is authorised and regulated in the UK by the Financial Conduct Authority (FCA - Reference Number 147956). The [A/B] logo is a registered service mark of AB and AllianceBernstein® is a registered service mark used by permission of the owner, AllianceBernstein.