UK. Consultation risks taking DC pension consolidation ‘too far, too fast’
The Department for Work and Pensions’ (DWP) most recent consultation on further consolidation in the defined contribution (DC) pension market risks taking consolidation “too far, too fast”, according to Hymans Robertson.
In its response to the consultation Future of the DC pension market: the case for greater consolidation, Hymans Robertson warned that taking consolidation further and faster would be “counter-productive”, and reduce competition and innovation.
“Since DC took over from defined benefit (DB) as the main source of pension provision in the UK and auto-enrolment was introduced, DC assets have increased massively,” stated Hymans Robertson partner, Lee Hollingsworth.
“But this still remains relatively small compared with what we expect to see in the future. Now is not the time to accelerate the pace of consolidation.”
Hollingsworth noted that the impact of phase one of the consolidation process was still being seen and “will take some time to work itself through”.
“We’d hope, and expect, that this will result in a functioning, competitive environment of about 20 providers each managing assets in excess of £10bn,” he continued.
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