Why is Defined Contribution decumulation such a big issue for savers in the UK and what’s happening to tackle it?
Key action items included the launch of the first collective defined contribution (CDC) scheme, consultation on extending CDC schemes to whole-life multiple employer schemes, and the establishment of a small pots delivery group to address the challenge of consolidating small pension pots
In this session at IV24, Toby Nagle of the Financial Times spoke about the complexity of both Defined Benefit and Defined Contribution consolidation, citing potential benefits such as economies of scale and improved governance
Jordi Skilbeck, Senior Policy Advisor, PLSA, gives the PLSA’s view on a potentially major shift in Defined Contribution pension policy
Panel members: Alyshia Harrington-Clark, Head of DC, Master Trusts and Lifetime Savings, PLSA (Session chair) Ruari Grant, Policy Lead: DC, PLSA Lizzy Holliday, Director of Public Affairs and Policy, NOW: Pensions Michael Jones, Partner, Eversheds Sutherland Jesal Mistry, Head of DC Investment Proposition and Governance, Legal & General Investment Management Summary of the session The panel discussion focused on investment strategies for Defined Contribution (DC) pensions regarding decumulation
Throughout 2024 we’ll also continue looking at the areas of better Defined Contribution, the future of Defined Benefit, tomorrow’s LGPS, engagement, responsible investment, governance and administration.
While this outcome is undoubtedly a success, there remains a value gap for some savers. Most defined contribution (DC) members are defaulted into their schemes and, consequently, engage very little with their providers
Panel members: Dan Mikulskis, Chief Investment Officer, People’s Partnership Padmesh Shukla, Chief Investment Officer, Transport for London Pension Fund Leandros Kalisperas, Chief Investment Officer, West Yorkshire Pension Fund Chaired by Laura Myers, Head of Defined Contribution, LCP, Member, PLSA Board
However, when transferring from a DB scheme to a defined contribution (DC) scheme, savers forfeit their guaranteed lifetime income that has inflationary protections
There is a significant difference in employer contribution rates to defined benefit (DB) and defined contribution (DC) schemes continues, with about half of DB savers receiving employer contributions higher of 20% or more, compared to around a fifth of those in DC schemes
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