The NAPF has responded to the Government’s call for evidence on minimum standards in DC pensions.
The Government’s call for evidence is a welcome contribution to the debate on standards in DC. With millions being auto-enrolled into DC pensions, it is essential that they are capable of delivering good member outcomes.
However, the UK’s pension landscape is currently fragmented. We need fewer, larger and well-governed schemes and there is much evidence from around the world that members of larger schemes are likely to benefit from economies of scale. Ultimately, employers should turn to a large multi-employer trust-based scheme if they are new to pensions, and should only consider establishing their own contract-based scheme if they are really engaged with pensions.
The Government should also revisit a couple of its proposals. For example, it may not be feasible to give commercial providers a trustee-style fiduciary duty, given the other duties which apply to them.
The NAPF has been leading the way in raising standards in DC pensions, particularly through the Pension Quality Mark but also through the Code of Conduct on Charges. There is strong and widespread interest in quality so the Government should ensure its work is well aligned with the PQM and the Pensions Regulator’s DC Code of Practice.