Jacqui Reid comments on Pensions Investment Review consultation
Jacqui Reid, partner comments:
“We welcome the Government seeking views from the industry on its proposed reforms to accelerate consolidation in the DC market. We know that the Government’s primary objective is to generate further investment in the UK and that this is in reality the key driver behind these proposals. We are supportive of the creation of “mega funds” in principle, provided that the interests of members remain central to their creation and that there are no barriers which prevent much needed innovation in the DC pensions industry. We believe greater clarity is needed from the Ministers on exactly what the Government wants from the pensions industry to achieve its aims – defining exactly what is meant by “UK productive finance”, “fund” “scheme” and “default” is critical as we think they can be interpreted in many different ways. We also encourage the Government listen to the views of the industry on the extent of scale needed to invest in UK private infrastructure as there are a range of opinions on how big mega funds need to be in practice to achieve the Government’s objective and on the extent to which such assets will be readily available.
In our view, large-scale consolidation whether that be at “fund” or “scheme”, “trust” or “contract” level would create substantial and costly upheaval over a number of years. Any large scale change needs to be mindful of trustee fiduciary duties to members, providers’ obligations in respect of consumer duty and IGCs’ role of ensuring value from the perspective of the member.
We believe the proposed pace for consolidation is optimistic and the Government should instead consider phasing its proposals over a longer period. If consolidation happens too quickly, and without a publicly shared roadmap for doing so, the result could cut across other Government objectives at a time when savings adequacy is under threat.”
Read our Consultation Response, here:
