DC Comes of Age…
07 Jun 2019 - Estimated reading time: 3 minutes
Has DC come of age or is it actually a bit of a petulant teenager which we still have to develop into a well-rounded mature adult?
With around 15 million people in DC plans and assets of around £400bn, we could argue that DC has indeed come of age. But as we saw at our DC conference on the 5 June, there are still plenty of aspects we need to develop to ensure that we can genuinely deliver better outcomes for our members over the longer term.
We had some great speakers at our conference and from the feedback I heard, there were lots of people heading back to their offices with a “to do” list! The debate in the first session on scheme structures was an interesting one. The audience endorsed the thinking that there is still a place for single trust schemes in the future, with 73% agreeing that it will still be a viable option in 5 years. But it was also clear that, certainly for larger employers, a “set and forget” approach when moving to a master trust arrangement may not deliver the best possible outcomes for members over the longer term.
In session two, we asked whether targets will get people more engaged with pensions. The answer appeared to be a resounding yes, with 85% of our audience agreeing that targets will have a positive impact, but there was pragmatism around how long it would take for the PLSA’s new income targets to be adopted more widely. Even PLSA Chair, Richard Butcher, admitted that they have a big task on their hands with the promotion of the new targets that will be launched at PLSA’s conference in October. But he encouraged people from all parts of the pension industry to help to build confidence in the targets. I, for one, want to make sure that I can still afford to drink bottled wine rather than homebrew when I retire!
And coming back to the petulant teenager, I think Nick Throp from like minds' session hit the nail on the head when he busted the myth about the need for a beginning, middle and end to the “story” when communicating pensions. I’m also certainly now thinking much more closely about social media and how it could be used to communicate with members about their pension benefits – and at what time of day!
Responsible investment is here to stay – that message was clear from the final session of the day. But the overriding message from the audience was that there is a need for clarity in definitions and a much better understanding more generally of the long term financial impact of environmental, social and governance issues and, in particular, climate change. But that shouldn’t stop us from reviewing our investments now and understanding more about how ESG factors could impact their future performance.
Auto-enrolment has been hugely successful in getting millions of new members into pension saving. But it now needs continued innovation from all of us in the industry to make sure that we can deliver better outcomes for our members in the future. I’m up for the challenge – are you?