PLSA comments on Incorporating performance fees within the charge cap consultation | Pensions and Lifetime Savings Association

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PLSA comments on Incorporating performance fees within the charge cap consultation

19 April 2021

The Pensions and Lifetime Savings Association (PLSA) has published its submission to the DWP consultation, ‘Incorporating performance fees within the charge cap’.

Nigel Peaple, Director of Policy and Advocacy at the PLSA, said: “The PLSA welcomes the intent to make it easier for DC schemes to invest in a wider range of assets and illiquid investments.

“We support the charge cap at its current level, and as many schemes are interested in investing to some degree in illiquid assets, we also support the DWP’s proposal to amend the charge cap calculation, so that performance fees can be smoothed over several years.

“However, we do not believe that the alterations will lead to a material change in the volume of investment in illiquids. A focus by trustees on securing low charges in a competitive market; the prudent person principle, which requires schemes to take careful consideration of risk and reward; and operational barriers, such as the flexibility to move pots when requested and daily dealing, are likely to always result in only a very low proportion of scheme investment in such assets.

“Although it is clear that there are many challenges still to resolve, the PLSA supports measures that enable savers in workplace pensions to benefit from the risk/return profile that illiquid assets can deliver. As part of the work in the Taskforce on Productive Finance, the PLSA is helping look at structural and perceived barriers to DC schemes investing in illiquid assets, such as trustee skills and training.”

The full PLSA submission can be downloaded from the PLSA website.

Mark Smith, Senior PR Manager
 020 7601 1726 |  [email protected]k

Steven Kennedy, PR Manager
 020 7601 1737 | 07713 073024 | [email protected]