An overriding issue is the general lack of governance or management around DC plans. To what extent, for instance, are the problems we have considered even recognised by employers? How wide a problem is it? Are employers monitoring benefit adequacy alongside their ongoing measurement and monitoring of service providers?
What segments of their workforce are the most affected? These are all critical issues that employers should be on top of as part of the ongoing governance or management of their DC plans – it is, after all, just basic risk management.
We expect many employers will maintain DC plans for many years to come. Those who do so successfully will be those that have clear strategic objectives against which they regularly measure and monitor their pension’s scheme as part of their governance or management of the plan.
These successful employers will recognise that DC is not a panacea and it is not the only alternative to final salary. However, it is also clear that DC can be made to function effectively by taking certain appropriate steps.
