Commenting on the implications for the DC market from the speech given yesterday by Nausicaa Delfas, CEO of TPR on her vision for the Pensions industry, Paul Waters, Head of DC Markets, Hymans Robertson says:

“Nausicaa Delfas’s comments yesterday outlining her vision at the help of TPR were very welcome for the DC market. Her clear focus on a number of key areas that are essential for delivering better outcomes for UK savers in DC pensions were particularly welcome. For us, our clients and scheme members we believe the most important elements she raised were about innovation, a focus on growth and cost over returns, her concerns that the ‘At Retirement’ market is not developing fast enough and the overall challenge for the industry to demand and deliver the best for members.

“Innovation is central 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 this is followed through by positive engagement throughout the industry on new product design and digital engagement with a close and coherent policy regime with the FCA.

“Value for Money must be a priority; costs and charges are important but not if quality and suitability of service or performance are poor. There is a need for a focus on growth and cost over returns. The race to the bottom on charges is harming members and constraining opportunities unnecessarily. TPR’s value focus is right and can drive better returns. In order to unlock the potential of investing in alternative asset classes such as illiquids, there needs to me wider acknowledgement that the cheapest option does not always offer the greatest value.

“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. It is clear that the ‘At Retirement’ market is simply not developing fast enough. Significant enhancements in product design and digital engagement are needed, along with an extended MaPs support model and new initiatives to boost take up for this market to thrive and offer members a better retirement.

“The industry faces a big challenge to demand and deliver the best for members over the coming years. Employers must recognise that they have a massive role to play here. A “too busy/too passive” approach to managing their provider is leading to missed opportunities to create high value pension propositions 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. If employers working collaboratively with their provider to demand the best they can offer it will lead to higher standards for all. An active provider market where employers will move scheme to get the right solution is the ultimate fall-back employers should take.”