The anticipated overhaul of defined contribution (DC) pension schemes through the Pension Schemes Bill could see a majority of employers make changes to their provision, research indicates.
A survey by professional trustee firm LawDeb Pensions found that four in five (80%) businesses currently offering a DC pension scheme anticipate changing their provision type in the coming years.
Two in five (41%) respondents said they expected to move to a DC master trust in the future. This comes as master trusts and other DC providers are under pressure to reach the government’s £25bn minimum scale threshold, as outlined in the Pension Schemes Bill. Roughly a quarter (26%) cited changes linked to the Mansion House Accord as influencing potential shifts in pension provision.
“It’s clear that businesses are already anticipating widespread changes, but trustees must also ensure that they focus on delivering improved outcomes in the face of a rapidly changing market.”
Elizabeth Hartree, LawDeb Pensions
Respondents cited the search for better value for money (50%) and improved governance (41%) as key factors in changing their pension provision.
Nearly a quarter (22%) said they planned to move to an “own trust” model, while 16% envisaged moving to a group personal pension arrangement.
One in five (20%) said they did not plan to change their current setup.
Elizabeth Hartree, trustee director and head of DC at LawDeb Pensions, said companies were being proactive while facing “an increasingly complex financial and regulatory landscape”.
“Upcoming changes, such as the Pension Schemes Bill and measures to introduce targeted support, will have a seismic effect on the DC market,” she said. “While it could deliver positive, member-focused outcomes, it will require serious consideration from any business with a DC arrangement.
“It’s clear that businesses are already anticipating widespread changes, but trustees must also ensure that they focus on delivering improved outcomes in the face of a rapidly changing market.”
