Employers should be reviewing their defined contribution (DC) pension provider every three years and be more open to switching pension schemes, Hymans Robertson has said.

In its new report, Debunking the myths of moving pension arrangements, Hymans Robertson said willingness to explore different scheme arrangements is the best way to make sure that providers are aligned with employers' objectives and the needs of their employees.

Moving employees into a new scheme is also not as cumbersome and time-consuming as many believe it to be, the consultancy argued.

In the paper it addressed what it calls three "myths" surrounding DC scheme switches, namely: that providers all offer the same product, that entry into a master trust or contract-based arrangement precludes further scheme switches and that changing providers is a complex and slow process.

Commenting on the first so-called myth, Hymans Robertson DC plan effectiveness consultant Rachel Haggarty, said providers all have something different to offer — aside from the need to meet regulatory requirements.

She explained that providers approach offering value for members in a number of different ways, such as through the use of unique targeted communications and technology to drive member engagement or the design of their default investment strategy.

"It could also be through the access members have to advice and guidance in the lead up to retirement," said Haggarty. "These can all differ quite significantly between providers."

Providers are also continually developing their schemes to stay competitive, she said, which helps drive innovation and competitive pricing.

Regarding the second "myth", Haggarty argued that employers must not treat the setting up of their DC schemes into contract-based or master trust arrangements as "job done" as they need to consistently check that providers are delivering value to members, as they can change significantly over time.

"In recent years we’ve already seen many schemes move from being within a contract-based arrangement to be within a master trust arrangement," she continued.

"Whilst master trust to master trust moves have not been commonplace in the pensions market yet, we expect this to change in the next few years. It may well be the right thing for the DC scheme to move providers.”

Referring to the final supposed myth that switching providers is difficult to do, Haggarty argued that changing pension providers can take as little as three months and not more than nine months — and that the heavy lifting for setting up a new arrangement within payroll is mainly carried out by a provider.

They will also support employers in communicating changes as well, in many cases.

Switching is also easier if other structural changes are taking place within a business.

"If an employer is considering other changes within its business, such as changes to the workforce, a new pension scheme design or a new payroll system, then it might be efficient to consider whether a change of pension provider is the right thing at the same time,” added Haggarty.

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