Editorial: DC or DB: which is harder?

The argument runs that there is the unknown factor of what an employee’s retirement income is, the difficulty of engaging with members and the fact that most of us are not accumulating enough in DC compared with those in DB. And of course, DC trustees or governance committee members then have to cope with the disinterest of the employer or the main trustee board, who are focused on DB.

The TUC is waking up to the measure of this problem after years of trying to hold back the tide of DB scheme closures, with a report called the Pensions Scorecard 2012. This assesses the suitability of DC schemes by membership
numbers, contributions, governance and outcomes. It gives UK DC schemes a general rating of 4.75 out of 10 – its low score on governance (3 out of 10) and contributions (4 out of 10) being the black marks.

Ironically, I believe such candidness so early on in the life of DC is a cause for optimism in the role of the DC scheme representative.
The awareness of the challenge is being heightened every day – furthermore this is a challenge that is more explainable than the workings of DB, which many people, including politicians, never understand.

Now, DB trustees might feel the level of knowledge they need has become so time consuming that looking after a DC scheme would be like a walk round Waitrose on a Monday afternoon, but if the DC role is being carried out properly, they would be wrong.