Pension industry needs to be bold to deliver best value

The pensions industry needs to be bold if it is to deliver increased value and the best outcome for members.

Defined contribution (DC) scheme charges, in particular, need to be brought into line across all providers with greater transparency.

Speaking in a panel debate at the National Association of Pension Funds’ annual conference in Manchester, Jamie Fiveash, director of customer solutions at B&CE, said: “How can innovation and competition be effective if the consumer doesn’t know when they are being charged? We must move to a single charging basis. That has to be at the point of sale.

“Providers need to innovate on service and investment but not on charging. We all need to charge the same way.”

But high charges may not always be a bad thing. Speaking in the same debate, Andy Seed, director – DC pensions at KPMG, said: “If there is demonstrable value [for members], don’t dismiss higher charges. Don’t just look at charges and investment in isolation.”

According to Stephen Bowles (pictured), head of defined contribution at Schroders, increased time and effort needs to be spent on investment, because only investment can achieve stable growth. “Investment is the key determinant of outcomes,” he said.

He added that it is vital for governance and investment committees to effectively balance risk and return, in particular, delivering reduced volatility and protecting members’ assets in the last 20 years before retirement.

In addition, members must also start to make adequate contributions as early as possible is also key to members achieving good outcomes in retirement from their DC scheme, added Seed.