Commenting on the DWP’s Consultation on Broadening the Investment Opportunities of DC Pension Schemes, announced today, Callum Stewart, Head of DC Investment, Hymans Robertson, says:

“It is good to see the Government’s ongoing focus on facilitating investment from DC schemes in a wider universe of opportunities including illiquid assets. In particular, we are supportive of the requirement to require trustees to put in place formal policies on illiquid assets in their statements of investment principles.

“However that is not enough and we are very disappointed in the lack of focus on materially moving the dial away from emphasis on cost and governance reporting requirements that add little value, to wider value and opportunity. As an industry we will fail DC savers if we don’t focus on areas that can really move the dial in terms of members’ retirement outcomes. Requiring reporting on asset allocation including illiquid assets in the annual Chair’s Statement will, in our view, add further costs and pressure on trustees, detracting from a focus on bigger picture areas that can really improve these outcomes. This will perpetuate the current over-emphasis on minutiae detail versus bigger picture areas. When we responded to the original consultation, we highlighted the overlap in reporting requirements for the implementation statement which will provide transparency on how policies with regard to illiquid assets are being put into practice. It’s disappointing that this has not been addressed in the response, and trustees will have overlapping reporting requirements going forward.

“As an industry, we need to move emphasis away from governance requirements that don’t add value, to addressing bigger picture issues. This includes not tinkering around the edges of regulation – we need much bolder action to improve outcomes for DC savers and we will be responding to the latest consultation with this in mind.”