An industry code of practice for bulk DC transfers is needed; however, reaching a consensus is challenging due to differing priorities among stakeholders which complicates its implementation.
That was the main point from the chair of master trust working group at The Pension Administration Standards Association (PASA) David Porter at the Corporate Adviser summit. A point also echoed by consultants in a poll where 90 per cent said they also believe an industry standard is required.
Porter said there is a strong push for a standardised and efficient bulk transfer process to simplify transitions. He suggested that “we can have an efficient bulk transfer, a standardised one, good mechanism,” advocating for choice and efficiency for members moving between providers.
Porter said he believes that regulation is an important aspect of improving transfer efficiency and avoiding delays, “I think that that would probably be the most appropriate way to go.” He also emphasised that data shouldn’t be used as an excuse for delays.
Porter highlighted several obstacles to the transfer process, including conflicts of interest and high costs associated with the tendering process. These issues include whether to incorporate “deferred members” in pricing, which affects decision-making.
Around 61 per cent of attending consultants also said that there should be a requirement that all deferred members be transferred with active members in bulk transfers.
Porter acknowledged the market’s clashing priorities and said that the ongoing market consolidation, notably the “collapse of those smaller schemes,” highlights the need for a more efficient marketplace.
He also noted the trend of single-employer trusts transitioning into Master Trusts, citing a million new members being brought into Master Trusts from 5000 employers.
He added that consolidation and competition will help drive innovation. Employers can “vote with their feet” by switching providers, which is critical for creating a competitive environment.
Additionally, the desire for value for money influences product differentiation and delivery in the market. Porter noted the debate around how providers self-assess their VfM which he said shows a necessity for more objective benchmarks.