The Department for Work and Pensions (DWP) has today confirmed two further consultations for spring 2020, expected to collect industry views on both performance fees and further regulations on DC consolidation.

Speaking at the PLSA Investment Conference today (12 March), Pensions Minister, Guy Opperman stated: "There are many thousands of occupational DC schemes where members are themselves the trustees.

"Trustees of these schemes suffer obviously from power imbalances when trying to engage service providers, with little more power than retail investors, and they’re missing out clearly on good governance.

"So I’m looking forward to bringing forward regulations for consultations in Spring to nudge these schemes towards consolidation.

"And be under no illusion, consolidation is what we are going to try and do."

Turning to the issue of performance fees, Opperman added: "I am also looking to consult on regulations that allow schemes to pay performance fees, where they wish, without diluting the charge cap.

"This might give schemes a wider choice of illiquid investments in certain higher risk sectors.

"Along with the Financial Conduct Authority’s work on updated rules and permitted links, and the Treasury’s work on patient capital, this has the potential to deliver diversified returns whilst facilitating investments in the assets we all need."

He emphasised: "I don’t think you should be under any illusions after the election on 12 December, that investment in infrastructure and illiquids is something the government is passionate about.

"We are creating a diversification of DC default offerings and going forward we believe we have the potential to smooth and diversify returns and improve long term member outcomes."

Both consultations were initially announced at the PLSA Annual Conference in October 2019, with an aim to bring regulation in by October of 2020.

The minister has also announced plans for consultation on climate related disclosures, with PCRIG also announcing a consultation on supporting guidance for trustees.

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