Commenting on the DWP consultation on Helping savers understand their pension choices, Kathryn Fleming, Partner, Hymans Robertson, said:

“We wholeheartedly agree with the consultation’s proposals to offer support for those who find the decisions they need to make at the point of access daunting and to help trustees provide less engaged members with default options.

“The consultation suggests an aim ‘to establish a broad alignment in the service offer among different providers where every pension scheme, either directly or through a partnering arrangement, provide decumulation solutions for their members’. We believe this can be achieved through a step-based approach. Firstly, all DC trust-based schemes should be required to provide a solution to support a member in accessing the full range of the pension freedoms. Secondly, Master Trusts and Pension Providers should be asked to design a default solution for any member that does not wish to make any active choices at retirement. Thirdly, DC Trusts and Hybrid scheme trustees should be required to put in place a default decumulation solution. This phased approach will allow for innovation to have a credible chance of success, balance the risk appetites and budgets of employers and trustees, and play to the strengths of trustees.

“It is important to recognise that there are a range of risk sharing approaches other than CDC that can be delivered by the industry to make a meaningful difference to retirement incomes. The approach provided has to fit, among other things, with scheme membership needs and what the market can actually offer.”

Commenting on the DWP consultation on addressing the challenge of deferred small pots, Alison Leslie, Head of Master Trust Trustee Consulting, Hymans Robertson, said:

“We are supportive of the idea of default consolidators with a central clearing house which will support the transfer of small pots to the appropriate place. We do however feel that a framework for authorisation is required to support this system and ensure members do not end up in poorer value for money arrangements. The detail of this framework is not clear at present. In addition, a robust system of safeguards is required for providers to ensure that the rules and processes are clear and do not leave them open to challenge. Finally, when you put this approach through the lens of DE&I, there will be a need for some form of filtering mechanism such that there are no detrimental unintended consequences on minority groups.”

Commenting on the DWP consultation on Pension trustee skills, Laura Andrikopoulos, Partner and Governance Consulting lead, Hymans Robertson, said:

“Pensions regulation and guidance could more strongly encourage effectiveness reviews, as is common in the corporate governance world. The lack of focus on this in current regulation means many schemes can continue without evaluating their performance on a regular basis.

“We have reservations about the idea of a register of all trustees. TPR would need to be very clear about how this register would be used. It could have the effect of driving lay trustees out of their roles to avoid such registration unless it was very clear how this information would be used by TPR. However, a register of all trustees could help to ensure lay trustees feel as valued as professional trustees.

“We don’t support the idea of requiring schemes to have a certain proportion of accredited trustees. This requirement could be quite onerous on the smaller schemes, due to the range of pension schemes, including a large number of very small schemes.”