The Minister for Pensions, Laura Trott MP MBE, has today unveiled a range of measures which are designed to reduce the inequality between DB and DC pensions by delivering better value for DC savers and boosting fairness, predictability, and adequacy across the private pensions sector. The measures include:

Announcing these initiatives, Laura Trott said:

"There is a pension inequality gap between those who had secure retirements thanks to DB, to much more uncertainty now. Since 2012, Automatic Enrolment has transformed the pensions landscape in the UK for the better, but we know there's more to be done to ensure a fairer future for savers.

Being in an underperforming pension scheme can lead to someone missing out on thousands of pounds. The Value for Money framework and our new measures will improve security and create better returns for savers, so they can enjoy the retirement they've worked so hard for."

The proposals announced today include:

  • plans for schemes to disclose their investment performance, costs and charges, and quality of service via clear and comparable metrics;
  • confirmation that the Government plans to reform the DC charge cap to exclude "well designed" performance fees which it hopes will give schemes more flexibility to invest in illiquid assets such as start-up companies, renewables and infrastructure;
  • potential solutions to tackle the issue of small pots; and
  • an extension of Collective Defined Contribution (CDC) schemes, most significantly to include multi-employer models.

We will consider these proposals in more detail in future blogs.

Alongside these proposals, the Government also published the findings from qualitative research on member engagement. The research was designed to explore the current understanding and level of engagement members who have been automatically enrolled into a workplace pension scheme have with their pensions. The findings cover pension understanding among members and decision-making influences, responses towards pension charges and potential standardisation of charging, current member behaviour towards small and deferred pension pots and recommendations to aid member engagement.


Last week, the Government confirmed that it had no immediate plans to increase the auto-enrolment minimum contribution rates. However, that does not mean that it is content to leave the DC pensions landscape untouched. The measures announced today are designed to ensure that individuals get the most out of what they are currently saving. The shift in emphasis from costs to overall value (including net returns) in the value for money framework is welcome. It is also pleasing to see that the Government is taking active steps to find a solution to the growing problem of small deferred pots.

That said, while these measures should improve DC pensions, at some point the Government will need to grasp the nettle on contribution rates if it is serious about closing the gap between DB and DC.

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