Pensions - Articles - PLSA call for a coherent framework for DC scheme investment

The Government needs to provide a coherent framework for defined contribution scheme investment, the PLSA has stated.

 The call comes as part of its response to the Department for Work and Pensions (DWP) on Investment Innovation and Future Consolidation that aims to stimulate trustees’ appetite for illiquid investment approaches.

 The PLSA stated that although schemes are often well-placed to invest in illiquid assets any policy must be in line with creating a broader environment where trustees can invest in members’ best interests.

 The PLSA also strongly supports the charge cap on default funds and believes it has been a positive step in ensuring greater value for money for members. It also welcomes the Government’s commitment to maintaining the cap at its current level.

 Caroline Escott, Policy Lead: Investment & Stewardship, PLSA, said: “We support Government efforts to create a regulatory and policy framework which enables schemes to invest in a wider range of assets. However, it’s absolutely vital that the Government provides a coherent framework that doesn’t interfere with trustees’ duty to invest in the best interests of members.

 “Many pension schemes already invest in housing, infrastructure, and other illiquids. What pension schemes now need is a coherent policy and regulatory framework which supports them in investing in accordance with trust law and with their fiduciary duty to members. We would like to express our thanks to the Government for their willingness to engage with us and our members on this issue.”

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