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.