Mike Ambery, Retirement Savings Director at Standard Life, part of Phoenix Group said: “The direction of travel for DC schemes is clear with the government looking to encourage greater transparency around performance and where money is invested. 2027 for proposed pension fund reforms is not a long time away and will send a tremor to those running pension funds that are poorly performing. Roll on another three years to 2030 and that is the target for Mansion House and significant private and public sector commitment to unlisted equities. Both of these initiatives are likely to encourage consolidation and a move towards fewer, larger schemes. Even the largest own trust (employer) pension schemes will now be caught by this move.
“We welcome this focus on performance and transparency around investments but would encourage any new framework to focus on performance in the round. Investment performance is a key consideration but attention also needs to be paid to other factors we know are important to customers like the quality of digital services and service indicators like Net Promoter Scores. We also can’t lose focus on the biggest single factor impacting people’s retirement outcomes – the relatively low levels of contributions they are making and what is currently required under automatic enrolment. We would like to see a regular government review of the contribution rates by employers and employees, considering the outcomes people are on track for.
“At the outset the focus of these initiatives will be on communicating performance to employers rather than customers. Over time customers might get notice of the poor performance and be told how this will be fixed for them. This is very much the case in other countries such as Australia. Options might include moving pension savings to those that are better performing. We will need to be careful on ensuring trust in savings and how we communicate to the customer.”
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