Four key priorities for DC schemes in 2024

At a webinar hosted by Sackers and professional trustee firm IGG this week, experts set out four key areas of focus for DC schemes in 2024.

Chairing the webinar, Dianne Day, trustee director and Head of DC at IGG, said: “With the Mansion House reforms coming on top of a plethora of consultations, many DC trustees are finding it hard to know what to prioritise. We’ve focused on cyber security, value for money, dashboards and investment in private markets and set out some practical steps trustees can be taking now to plan ahead for 2024.”

Sackers’ partner Oliver Topping set out his key tips on how to get cyber ready: “At the trustee board level, training is a good place to start to ensure that trustees understand the risks involved. Trustees should review their “cyber footprint” and, if any vulnerabilities are identified, consider how best to address them. And, from a governance perspective, make sure that all the good work you do on cyber preparation is properly documented.”

Moving on to value for money (VFM), Sackers’ partner Jacqui Reid emphasised that VFM is central to all the government’s proposals which impact DC pension provision. She noted that the recent consultation response is relatively unusual in that it was jointly run by TPR, FCA and DWP to ensure a continuity of approach right across the industry.  She stated: “The proposed changes represent a sea change in disclosure – the data that schemes will be required to disclose is much more extensive and wide ranging than is the case at present. The ambition is that statutory guidance will ensure that schemes are measuring the same things, in the same way, at the same time. However, the changes are not set to come in immediately so there is time to think about how you are going to collate and publish the data points and to consider what potential comparators you are going to use.”

Dianne Day added: “There is a lot of work for schemes to do in this area and we would encourage trustees to start to think about the unique circumstances of their schemes and how they are going to approach the task of data collection.”

On dashboards, Topping warned that although the legally binding date when all schemes must be connected by has been pushed back to 31 October 2026, there is still plenty for trustees to do. He said: “We recommend using the time to focus on data accuracy and quality, including member tracing. The delay also provides a good opportunity to gain a better understanding of the scope of your provider’s offering, to formalise the contractual relationship with your chosen provider and to think about how dashboards are going to interact with existing modellers and communication strategies.”

The final key priority for 2024 was identified as investment in private markets, an area that the government seems keen to encourage. Tegs Harding, trustee director and Head of Sustainability at IGG, noted: “This is a rapidly evolving area and one which can lead to better outcomes for members, but only if the structures are in place to support the investment. Trustees need to carefully consider whether the assets are large enough to access illiquids at a reasonable cost, whether the scheme cashflows are large enough to withstand rebalancing and whether there are plans to run the scheme without consolidating for the next 10/12 years. If the answer to those questions is yes, trustees can proceed to the next stage of consideration. It is important to remember that it is members that will bear these risks so a thorough understanding of what they are is essential.”

To access the recording of the webinar, please click here .