Other than death and taxes, it seems that the inexorable rise in members retiring with only with Defined Contribution (DC) pension benefits is another certainty.

What does this mean for us as DC trustees? How do we run the schemes efficiently, effectively and provide member value for money, along with all the other responsibilities which we have?

    • We have said it before and we say it again here, communication with members is absolutely essential for DC Trustees. The communication needs to include some form of education in order that members have the opportunity to think about their pension options whilst they still have a chance to make decisions in time. For example if the member wants to target an income for life and some cash then target investments towards this goal rather than simply cash.
    • How to communicate best with members? Our view is that asking them seems like the best way. This can be done by asking a cross section of members in the workplace or an online and/or postal survey. The important lesson is not to assume that a one size fits all communication approach works – the chances are we will communicate with members in a number of different ways.
    • As has been pointed out, engagement is a two way process. How do trustees support those members who do not respond to our communications? What is in the Trustee control is to have an appropriate default investment strategy in place. As importantly, once it’s up and running, to constantly monitor this to ensure that it continues to work for members as the company employee profile changes over time.
    • Not today, maybe not tomorrow but soon, DC Trustees need to have worked out what their strategy will be for members who want to take advantage of income drawdown. Whether this is a solution within the fund or to transfer the members assets to some other fund needs to be considered, costed and implemented.
  • What are you going to do with members as they approach retirement? Is the plan to point members in the direction of Pensions Wise or a website which purports to provide details of independent financial advisers or some form of robo-advice? Our belief is that the ‘it’s not our problem’ approach will not wash with members in the future – if it ever has.

For DC Trustees it is important to stay ahead of your members needs in order to be proactive and not reactive.

If you think that having a no obligation chat with Trustees who understand the importance of DC trusteeship would be a good use of time, then contact us at 0845 4334 199 or email us at enquiries@clarkbenefitconsulting.co.uk

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