All UK defined contribution (DC) pension schemes regardless of whether they are trust or contract-based should have independent trustee boards, the Labour shadow pensions minster Gregg McClymont says.
According to McClymont, independent trustee boards overseeing scheme governance would be mandatory for all DC schemes under a Labour government.
He said: “I would like to see a system where every scheme has independent trustees. That is where the Labour party would move towards, rather than have a distinction between trust and contract-based.”
He added: “The fiduciary duty would be extended to investment to give trustees more weapons to deliver value for money.”
However, he said for this to happen there would have to be economies of scale as the current UK market has too many small schemes.
“We have far too many schemes… the scale issue will be important. For the trust-based model to work there needs to be fewer schemes.”
When asked by Eversheds head of pensions Francois Barker whether he meant “parachuting” trustees into existing contract-based schemes or abolishing contract schemes altogether, he simply said: “Every scheme should have genuine trustee-based governance.”
McClymont also said in order to avoid a proliferation of small schemes there should be approved aggregator schemes which are held up as a benchmark for the rest of the DC industry to scale up to, rather than a pot follows member approach.
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