More than three-quarters (76%) of respondents said time constraints are a major impediment to good governance of defined contribution (DC) pension schemes, according to research by the Pensions Management Institute (PMI).
Its research, which surveyed 175 PMI members in response to the Department for Work and Pensions’ (DWP) call for evidence on quality standards in workplace DC pension schemes, found that 79% of respondents felt regular reviews of the scheme and its providers were needed.
The research also found:
- 75% of respondents agreed that transparency of charges within the default fund is seen as more important than the actual fees (54%).
- 81% of respondents said that a balance between short and long-term risk/return is important in investment design.
- 47% of respondents favoured lifestyling as a de-risking design, while 36% of respondents favoured target date funds.
Vince Linnane (pictured), chief executive of the Pensions Management Institute, said: “Defined contribution will be the bedrock of retirement provision in the UK, with millions of employees and employers coming to pensions for the first time.
“This will necessitate a renewed vigour in how the industry meets the challenge of effectively and fairly governing these plans. The PMI believes it can play a full role in this regard, welcomes the DWP’s call for evidence, and thanks its membership for its forthright and helpful perspective.”
Nigel Aston, managing director and head of UK DC at State Street Global Advisors, speaking on behalf of the PMI External Affairs Committee, added: “Solving the default investment puzzle that lies at the heart of every defined contribution plan is central to how the industry collectively meets the DC challenge.
“Robust and effective governance can help schemes to pragmatically solve the trade-offs between risk, reward and cost that need to be considered for all default solutions.”