The Governmental consultation sought feedback on two key measures designed to accelerate and help enable scale and consolidation in the Defined Contribution (DC) market. Namely, achieving scale in workplace DC schemes, and overriding individual contracts to allow the bulk transfer of assets for contract-based schemes without individual savers’ consent. Furthermore, the consultation explores what could be the ongoing roles of employers and those who advise them, in the DC market.  

 

We explore two specific questions in this consultation.

Whether there should be a named executive with responsibility for the retirement outcomes of staff and whether this measure would shift the focus from costs to more about the best outcome for pension schemes.

  • In large employers, such as publicly quoted companies, the board should be large enough for either an executive director or a non-executive director to take on responsibility for retirement outcomes.
  • However, not all employers will have a large enough board. The CIPD believes that this requirement would work only if it applied to large employers. We also suggest that in each large organisation a suitably qualified HR professional could help the individual with this responsibility.

Alternatively, whether a duty should be placed on all, or just large, workplaces to assess if their DC workplace pensions are giving members value for money.

  • The CIPD is not convinced that placing a legal duty on all employers would be useful. Instead, we prefer that such a requirement apply only to large organisations.
  • We would also recommend a phased approach so that employers do not undertake a review at the same time and cause a capacity crunch for benefit advisers.
  • Once a review of the workplace pension has been carried out, it should be signed off on behalf of the organisation by a responsible individual, such as a people or reward director with a relevant HR qualification.  

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