A study of 60 large UK and Irish companies by Watson Wyatt, entitled The future of DC governance found that trustees are spending most time on DC operational governance - mainly administration and the monitoring of providers.
By contrast they would like to spend most time on qualitative activities such as identifying and managing risks, investment strategy and member communication.
In particular, trustees felt they could add most value in the areas of investment and member engagement / communication, which are also the two areas where they feel there is most risk.
These desires were backed by the finding that 80% of trustees believe that income in retirement can be improved by good DC scheme governance.
Gary Smith, senior consultant at Watson Wyatt, said that the survey suggested one way forward.
“There is a growing sentiment among trustees that DC sub-committees should be formed to run their own separate meetings. Where the DC section is part of a DB scheme, we would support such delegated decision making.”
He added: “We would agree that investment is the area where good governance can add the most value and where members struggle most.”
The survey found that the main constraints for trustees in achieving best practice on DC were a shortage of time (largely caused by continual flow of legislative and regulatory changes) the inefficient structures/processes and a lack of expertise.
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