DC briefing – March 2015

Welcome to the latest edition of our DC briefing, which highlights topical news on DC pensions from a legal viewpoint.

DC schemes should offer members “value for money”. That’s easy to say and difficult to disagree with, but from April this year schemes will also have a legal requirement to measure it. This shines the spotlight on balancing good investment returns and the cost of getting these as never before. And it’s not to be confused with the charges cap on default funds. Just because you’ve kept your charges down doesn’t mean you are necessarily providing good value.

We are focusing on investment related issues in this briefing. Where before we have had best practice and guidance, from April there will be legal duties too. Many schemes will find they can meet these by adapting the information they are already receiving to monitor their investments, but it is also a useful opportunity to think afresh about what you really need to measure to check funds are delivering what you expected them to.

There is a way to go before we all start feeling comfortable we know what is required in the brave new DC world, but in the run-up to April:

  • don’t panic
  • do check you know what your default funds are
  • do bring your default fund charges in line with the 0.75% charge cap (there really isn’t much wriggle room here)
  • do make sure you are ready to explain to members what options they do and don’t have from the scheme.

The rest is a work in progress for everyone.