Personal Pension  

DC schemes lag behind DB in trustee headcount

DC schemes lag behind DB in trustee headcount

Only one in 10 defined contribution schemes have appointed professional trustees, as opposed to a quarter of defined benefit schemes, according to research from Premier

The corporate benefits and wealth management firm surveyed 133 pensions managers, finance directors, HR directors and trustees, and found that those schemes with professional trustees reported significantly higher stakeholder satisfaction, improved de-risking and a higher likelihood of meeting The Pension Regulator’s DC governance principles.

John Reeve, senior consultant at Premier, said the new flexibility and complexity of DC schemes means schemes need the expertise of professional trustees.

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He said: “Our experience has shown the additional costs of appointing professional trustees are more than offset in improved governance and cost savings elsewhere.”

Mr Reeve previously told FTAdviser that trustees are being forced to go above and beyond their traditional roles, now being cast as “guardians of members’ decisions” due to new regulatory pressures.

In February, the regulator published the first part of a communications package designed to help trustees prepare for the April at-retirement reforms.

The package will include guidance on new rules about governance and charge controls, on member requests for transfers from DB to DC schemes in order to access the new pension flexibilities.

The Centre for Policy Studies also recently suggested pension trustees should be trained, licensed and held personally liable for any governance failings in their schemes.

The survey also showed satisfaction with DB schemes fared higher than DC schemes from members’ and trustees’ perspectives.

Sponsor satisfaction was lowest overall, though the survey indicates that further de-risking would improve this score.

Unsurprisingly, sponsors rated DC schemes preferable to DB arrangements.

Mr Reeve suggested DB arrangements may not retain their position as the members’ scheme of choice much longer, once people begin to realise that the new pension freedoms do not apply to them.

Hargreaves Lansdown research last month suggested more than half a million DB scheme members are set to give up their guaranteed benefits by transferring out.

peter.walker@ft.com