Monday, 17 September 2007

Trust vs contract-based DC

There is an interesting bit in today's Pensions Week on the governance of DC schemes. Julian Webb of Tory-supporting fund manager Fidelity argues that contract-based DC is not the second choice option that we think it is. He reports back on Fidelity research into employers' views:

"[O]ver 60% of respondents plumped for contract-based DC provision. With benefits in cost and risk reduction, it is easy to see why. Companies offering their workforce a a contract-based scheme no longer have to run a trustee baord. They can pass investment and administration costs onto employees and effectively relinquish responsibility for the provision of pensions who leave the company..."

These, you understand, are good things. It still amazes me that providers in the UK feel no shame in saying these kinds of things publicly. As the article says, contract-based provision is a way to pass costs onto the punters and stop shouldering any remaining responsbility - ie shaft the workforce. It says a lot about how dominant the provider-employer relationship is in pension provision that this type of article isn't even seen as controversial.

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