One of the biggest problems we face in the Defined Contribution (DC) world is that each organisation delivering DC holds themselves to a different standard. This makes it very difficult for Trustees and employers. Whether they are looking for the right fit when selecting a new DC partner, or providing oversight of an established DC provider.
Everyone seems to speak a different language. There is often confusion around responsibility, expectations, requirements and best practice because of this, so PASA established its DC Governance Working Group (DCGWG) to address these issues. The Group is populated by specialist DC people from across the industry to ensure we capture the broadest possible perspective. PASA’s aim through this Group is to further improve DC governance standards, providing a benchmark for the industry - one that plays across all stakeholders in the DC space.
To achieve consistent and improved standards, the DCGWG decided on six areas of focus – data; employers and trustees; transitions; reporting; and controls and procedures. Sub-groups were formed to specifically focus on each of these areas, headed by people with a specific knowledge of their area. Whilst they have been developing their ideas and thoughts, they have also regularly reported back into the main group. This is to ensure all output is consistent, cohesive and that any overlaps are clearly defined.
Given the breadth of experience within the Group, they have been able to quickly identify some clear weak spots in the current DC landscape. The DCGWG is working to produce Guidance and other deliverables. By doing so, we believe this will strengthen DC so everyone involved has an agreed vision of what is ‘good’.
The Group is also conscious that DC operates in a constantly evolving industry, but one that often trails behind other industries when it comes to foresight, innovation and positive public perception. We know DC delivery will develop and improve over time and the Guidance will need to be flexible enough to stay relevant and useful against this backdrop.
With this in mind, our intention is for the Group to provide Guidance that is robust, fit for the future and aims to achieve positive outcomes for all stakeholders.
The Group will provide guidance that will be:
· Educational for those who need to develop their knowledge of what governance is and the impact it has on them
· Aspirational, for those who know that good, isn't good enough
· Fit for all organisations that operate in the DC sector, regardless of governance structure
To achieve a common approach to DC governance across the industry, we hope to gain support from our peers, industry and regulatory bodies by publishing the Group’s Guidance in the spring. This will form part of a consultation process, where we will actively encourage any and all feedback. We will welcome volunteers to pilot the Guidance.
Our objective is for everyone to know what good looks like when it comes to DC and, more importantly, to know how their own DC compares to this. Ultimately our aim is to develop a DC specific Accreditation which can be applied regardless of whether it is trust or contract based DC.
We know there are many stakeholders in the delivery of DC, but ultimately its operation must be able to deliver optimum outcomes for members. Much of recent focus has been on DC returns and costs. But if DC infrastructure is not able to ensure member contributions are invested in the right fund at the right time, then members will not get the best outcome.
At a time where DC is the king-in-waiting, the master trust authorisation is just around the corner and data is everything that we live and breathe, we hope the DCGWG’s work is received as intended – for the betterment of DC governance standards, industry education and attitudes towards DC and, of course, to good member outcomes.
Kim Gubler, Deputy Chair of PASA
