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NAPF proposes DC scheme efficiency tests

The National Association of Pension Funds is calling on policymakers to introduce an efficiency test for defined-contribution schemes as the trade body continues its push for super trusts.

Super trusts are large-scale, trust-based, not-for profit DC schemes, such as the National Employment Savings Trust established by the Government. The NAPF believes savers will benefit from lower charges and better governance if more super trusts are developed.

Speaking at TheCityUK’s pension conference last week, NAPF chief executive Joanne Segars (pictured) said the Government should consider forcing any scheme that is not operating efficiently to merge with another scheme.

She said: “Super trusts could be consolidators of small pension pots and also existing sub-scale DC schemes.

“Australia is introducing an efficiency test, so each year the trustees of super funds have to satisfy the regulator they are operating efficiently.

“If they are found not to be operating efficiently then they will be forced to consolidate with another super fund. I think that is quite an attractive way to speed up the process of reaching scale and efficiency.”

In an interview with Money Marketing in February, The Pensions Regulator chief executive Bill Galvin issued a warning to employers and trustees that schemes with fewer than 1,000 members may not be considered suitable for automatic enrolment.


Fast track

An increased focus on fund management charges could see the UK follow in the footsteps of the US, which has seen a surge in low-cost trackers. Gregor Watt reports


Q&A: What the Arch cru redress scheme means for firms

What is a consumer redress scheme? New powers were given to the FSA in 2010  to create consumer redress schemes to deal with specific market failures. Under section 404 of the Financial Services and Markets Act the FSA can require firms to review their sales and, where relevant, pay redress. The FSA can set up […]

ING Direct slashes interest-only LTV

ING Direct has cut its maximum loan-to-value ratio on interest-only lending from 75 per cent to 50 per cent. Borrowers can top up their borrowing to 80 per cent LTV as long as the additional 30 per cent is on a capital repayment basis. If the sale of the property is the repayment vehicle, ING […]

7IM profits soar 82%

Seven Investment Management saw profits leap by 82 per cent last year to £3.1m from £1.7m in 2010. It increased its platform assets under administration by 18 per cent from £2.2bn to £2.6bn. The results show 7IM had to pay a £22,000 Financial Services Compensation Scheme levy for the year to March 31 and it […]

Sub-Saharan Africa Near-Term Outlook

By Paul Caruana-Galizia, Neptune Economist

Sub-Saharan Africa’s economic renaissance continues. After growing at an average rate of five per cent over the past decade, the IMF projects an acceleration to 5.5 per cent growth among Sub-Saharan economies in the next two years, as developed economies emerge from the crisis. We expect this growth to be sustainable for three broad reasons.


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