Commenting on the response, Tess Page, ACA DC Committee Chair said: “From a practical perspective, we see no issues with the additional requirements for the disclosures in the Statement of Investment Principles (SIP) and the disclose and explain policy for Chair’s Statements.
“From a member perspective, there is value in ensuring that individuals are able to access clear information in a consistent format across their various pension arrangements. The approach set out in the proposals supports this. We do however note that in our experience the Chair’s Statement is not the “go-to” source of information for even the most engaged members. We welcome the DWP’s acknowledgement in 2021 that the Chair’s Statement, in its current form, is not working as a document intended for multiple audiences.
“From a trustee decision-making perspective, we are not convinced that being prompted to comment on policies on illiquid assets in the SIP, or providing asset allocations in the Chair’s Statement, will drive material interest and investment in illiquid assets. There is a danger that the wording becomes “boiler plate” in nature, for example by explaining that these assets are not used because charges remain high and availability of suitable vehicles remains low. At the margin, it may prompt discussion for some trustee boards. We have seen examples where other issues such as policies on climate change and other ESG risks and opportunities becomes “template” in nature rather than driving change.”
The ACA response says it would be open to the disclosures being required to cover self-select funds rather than focusing on default arrangements. It can be “easier” to introduce illiquid assets as part of a self-select range (owing to there being fewer constraints on charges), and trustees being prompted to consider this may allow confidence to be built on such options in advance of future incorporation in a default arrangement.
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