So what’s the point of the DC trustee?



It’s the first rule of trusteeship- if you can’t measure it – don’t trust it.

It’s the right of anyone who has their own pension pot to know how much they are paying for the management of their money. If they cannot get this information or make sense of the data, themselves, they should have people to do this for them.

I find it hard to tell a worn tyre from a good one, I need someone I trust (Kwikfit) to tell me when I need a new tyre (and fit it).

As for my retirement pot, I need to know it is being managed well. I need the people at the Legal and General Independent Governance Committee to tell me that the money invested in their multi-asset fund is being managed efficiently and yes- I want to see the numbers! I want to know how it is doing against its targets and what I am paying in the way not just of upfront charges – but in management costs.

So I would have thought the first thing that a DC trustee should be wanting to do, is to match the people in the insurance company IGC and tell me what I was paying, not just in absolute terms, but against some relevant benchmark. They need to know if – relative to the best in the market- the fund(s) they are offering to members are up to scratch.

But this viewed in the same way by the trustees of DC schemes – or so it would seem if you read Stephanie Baxter’s piece in this week’s Professional Pensions.


In a very cute piece of journalism ,Baxter gives certain commentators just enough rope to hang themselves, and then sits back to enjoy the show.

Let me counterpoint a comment in the article against her opening remarks!

“The role of defined contribution trustees is getting increasingly demanding as policymakers seek to ensure that savers get a good deal from pensions.

A major part of this is ensuring that charges and transaction costs are fair….

Trustees will face an even greater challenge when they are handed responsibility for assessing and reporting on how they have achieved “value for money”

Here is the response from a senior professional trustee and a member of the NAPF’s DC Committee

It’s something the NAPF, IMA and the Financial Service Authority (FSA) have all tried to do and they’ve all failed… it’s almost as if the DWP is saying that “where everyone has gone and failed, you trustees now have to succeed”.

This is crazy stuff! The point of the FCA and DWP’s intervention in the market is precisely because of the systemic failure of these noble bodies to bring the people who manage our money to account.

The FCA and DWP have the power to force fund managers to disclose information and the resource to create the tools which trustees can use to properly measure value for money. Trustees should be calling for these powers to be exercised, for these tools to be made available to them. Past failure should not be a guide to the future!  Remember…

If you can’t measure it, don’t flipping trust it!

Being a trustee is not easy, being a DC Trustee is particularly tough- you are responsible for the outcomes of your members.

DC Trustees are currently walking away from any responsibility for the decisions being taken by members at retirement (regrettable but understandable).

But to suggest that “the onus on trustees to acquire detailed data on transaction give greater disclosure on headline transaction costs and ..provide information on the outcomes that these transactions produced”  significantly ups the ante for trustees is a flagrant abnegation of responsibility. The onus to get members VFM has always been there, past failure should not be a guide to the future..

Would my man from Kwikfit allow me to drive on dodgy tyres because he had trouble with a wheel-nut?

The Pensions Regulator has been calling for this kind of governance since it published its “value for money”formulation in the “good DC outcomes” paper in January 2011. This blog has been calling for better disclosure, for the introductions of benchmarks and for Trustees to step up to the plate since 2009. Here we are 1350 blogs later with a senior DC mandarin moaning

“It’s not something trustees have done in the past”

As Captain Mainwaring might have commented

“shut up Pike, don’t you know there’s a war on”.



I am beginning to question the role of DC trustees. If doing the job is too hard and we have to employ professionals, why don’t we give the fiduciary role to IGCs and be done with it.




About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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