22 Jun 2021

On 21 June 2021 DWP published their response to their consultations on Improving outcomes for members of DC schemes and Incorporating performance fees within the charge cap.

The Government are taking forward their proposal for DC schemes to report net investment returns. They have provided guidance on how net returns can be calculated and reported in the chair statement.

The Government have provided more clarity in the draft regulations that will allow the smoothing of performance fees over five years.

We note that the Government have confirmed that they will not be making changes to the status of carried interest or other performance fees within the charge cap at this stage. They are encouraging the industry to enter constructive discussions to find fee structures that fit better within DC schemes’ default arrangements, in order to facilitate investments which may unlock potential higher returns for pensions savers.

Currently, trustees of occupational DC pension schemes, when investing in closed-ended funds or pooled investment vehicles, should look-through to the costs paid by the funds when they invest in underlying investments. The Government have confirmed that, as a minimum, the current requirement needs to be clarified and may need to be changed to remove the requirement to look-through. The Government intends to liaise with industry and other partners over the coming months before making a final decision on this.

The final draft regulations have been published at the same time. Reporting of costs, charges and other information: guidance for trustees and managers of occupational schemes, will be effective from 1 October 2021. Completing the annual Value for Members assessment Reporting Investment Returns: Guidance for trustees of relevant occupational DC schemes, will be effective from 1 October 2021, subject to approval of corresponding draft regulations by Parliament.

Also, DWP have launched a Call for Evidence on the Future of the defined contribution pension market: the case for greater consolidation to understand the barriers to further consolidation of the occupational trust-based Defined Contribution market in the UK. The deadline for responses is 29 July 2021.

If you have any comments regarding the response from Government or the new Call for Evidence please advise Jacqui Bungay (jbungay@aref.org.uk).


Jacqui Bungay

Jacqui Bungay

AREF Policy Secretariat , AREF

Jacqui provides policy guidance and secretariat services to the AREF Board and AREF Management Committee as well as the following AREF Committees: Corporate Governance, ESG & Impact Investing, Investor, Public Affairs, Research and Information and Retails Funds. In addition, Jacqui monitors members’ compliance with AREF’s Code of Practice. 

Jacqui joined AREF in 2014 after working for over 25 years in fund compliance, client relationships and administration at Natwest Trustee & Depositary Services.