Automatic enrolment is driving scale in pension provision and the clear trend is towards larger schemes which are better able to take advantage of the economies of scale including better access to a wider range of investment vehicles.
The Government fully supports the concrete steps the pensions industry has taken to cooperate on investment strategies – for example, the Pensions Infrastructure Platform (PIP) launched in February last year, and the London Collective Investment Vehicle (CIV) currently under development by a number of local authorities’ pension schemes in London.
Moreover, the Government will also work with the Local Government Pension Scheme Administering Authorities more widely to ensure that they pool investments to reduce costs significantly, while maintaining overall investment performance.
Trustees and managers are ultimately responsible for making investment decisions in the best interests of scheme members, and the Government recognises the challenges of the current economic environment for scheme funding. The Pensions Regulator sets out on an annual basis its key messages on current market conditions and how trustees and employers can agree appropriate funding plans that protect members’ benefits without undermining the sustainable growth of the employer.
Ministers continue to meet regularly with key stakeholders from the pensions industry to understand better the range of challenges facing schemes and employers and will consider whether there are further steps the Government could take.