This year’s Leadership summit at the Waldorf Hilton left in its wake quite a few lessons, and some surprises too, about how pension schemes and providers are meeting today’s industry challenges.
A few of these can be found on this site, whether it is Tesco Pension Fund’s implementation of in-house investment management or Whitbread’s vindication over its low-key auto-enrolment communications approach.
But the most interesting statement was reserved for those with ears still keen at the end of the day.
Andrew Warwick-Thompson, the Pensions Regulator’s head of defined contribution – among other titles – gave a fascinating hint of the watchdog’s perspective on the area under his leadership.
He said the regulator had given up on trying to engage all DC members in taking intelligent self-selected investment decisions. This raised a few eyebrows in the audience.
From my perspective, not because the stance seemed unwise, but because of the surprising honesty with which it was delivered.
You could argue that auto-enrolment has not yet substantially changed the saving behaviour, or non-saving behaviour, of the UK population. It has relied on people’s apathy to keep people in workplace schemes.
This is not news. But what the influx of passive savers has done is ratcheted up, again, the importance of the default investment strategy and the governance around the scheme.
And this is what the regulator will be focusing on – whether schemes can benchmark their value for money against their contemporaries.
Warwick-Thompson would not be drawn into the evaluation of whether a diversified growth fund is worth the extra cost on top of a equity tracker, but hinted the watchdog will look for fundamental indications of scheme quality to be reported on a regular basis.
Too often you hear that DC questions are pushed to the bottom of the trustee agenda. A move that amplifies these issues should be welcomed.
Ian Smith is editor of Pensions Week. You can follow him on Twitter @iankmsmith and the team @pensionsweek.
