Articles - Transforming the DC Market


In a recent speech, Nausicaa Delfas, CEO of The Pensions Regulator (TPR), outlined her vision for the pensions industry. We welcome her clear focus on a number of key areas which will be essential for delivering better outcomes for UK savers in DC pensions. Innovation is key to unlocking the opportunities that are out there for improved member outcomes. TPR’s clear direction for the industry to focus on this is encouraging and it’s important that this is followed through by positive engagement throughout the industry, encouraging new product design and digital engagement.

 By Paul Waters, Head of DC Markets at Hymans Robertson

 Close collaboration with the FCA will be crucial for jointly creating a policy regime that enables the industry to take forward transformative new ideas and deliver on this objective.

 Prioritising Value for Money
 Costs and charges are important, but focusing solely on them can compromise the opportunities available to deliver performance. We need a shift in focus towards growth and cost over returns. The race to the bottom on charges is harming members and unnecessarily limiting opportunities. TPR's emphasis on value-driven solutions can drive better returns. In order to unlock the potential of investing in alternative asset classes such as illiquids, there needs to be wider acknowledgement that the cheapest option does not always offer the greatest value.

 The 'At Retirement' Market
 The gap between the needs of members unable to access financial advice, and the non-advised solutions and decision making support available is massive and not being closed anywhere near fast enough. Significant enhancements in product design and digital engagement are urgently needed, along with an extended Money and Pensions Service (MaPs) support model and new initiatives to boost market participation. Closing the gap between the needs of non-advised members and the available decision-making support is crucial for this market to thrive and offer members a better retirement.

 Demanding the Best for Members
 The industry faces a significant challenge to demand and deliver the best for members. Employers have a crucial role to play - a "too busy/too passive" approach to managing their providers is leading to missed opportunities for creating high-value pension propositions and leveraging all the great capabilities most providers could deploy. It’s also leading to sub-optimal digital member experience and at times poor member administration service. By actively collaborating with providers and demanding the best solutions, employers can raise standards across the board. An active provider market where employers have the flexibility to move scheme to get the right solution is the ultimate fallback employers should take.

 In summary…
 Nausicaa Delfas's vision for the DC market presents a transformative opportunity for UK savers. Through innovation, a focus on value for money, addressing the 'At Retirement' market, and demanding the best for members, the DC market can revolutionise outcomes for pension savers. It’s crucial for all stakeholders, including employers, regulators, and financial institutions, to work collaboratively to realise the full potential of this vision and deliver the best for members. 

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