31 March 2021
‘This consultation is a positive move which will bring some much-needed greater transparency on defined contribution (DC) scheme investments for members and could deliver greater value for money in the long term. With the continued Government drive for DC consolidation, the proposed change to the estimated retirement income (ERI) requirements, specifically for Master Trusts with 500 or more active members, should make it easier for Master Trusts to access illiquid investments. This should then enable DC members to have more choice by increasing the diversity of their investments, in turn offering more options for responsible ESG investment, which will hopefully encourage members to save more.
The ‘disclose and explain’ proposal for DC schemes - to include their policies in respect of illiquid investments in the Statement of Investment Principles - is also welcome news and should enhance investment in opportunities arising in this market for sustainable investing. It is key for the Government and The Pensions Regulator to provide the right level of guidance to enable Trustees and DC members to balance their investment strategy with transparency of both investment return and costs and charges to enable better long-term outcomes. We look forward to the outcome of the consultation.'