How LawDeb works with defined contribution pension schemes
We work extensively with defined contribution (DC) arrangements with each of our trustees having DC experience. We work across master trusts and trust based schemes as well as governance of contract based schemes through our IGC appointments.
We are currently appointed to three master trusts, three Independent Governance Committees (IGCs), 30 DC schemes and 38 DB/DC hybrid schemes.
There are several members of the LawDeb team who have particularly strong DC experience thanks to their professional backgrounds and their current DC appointments.
What are the main differences between LawDeb’s role on a defined benefit (DB) versus a defined contribution (DC) scheme?
As independent pension trustees we are appointed to DB, DC and Hybrid (both DB and DC sections) schemes. Our responsibilities as independent professional trustees, common to all schemes cover:
- financial records and requirements
- selection and monitoring of professional advisers and service providers
- pension scheme records
- communicating with members
- reporting certain matters to regulators and authorities
However, there are differences to the specific focus of a trustee board based on the scheme type.
A trustee of a DB scheme is tasked with delivering the benefits to members by ensuring there is enough money to pay benefits as they fall due. This is managed by making good investment decisions, engaging with the sponsor and monitoring the assets and liabilities of the scheme.
For a scheme offering DC benefits, the trustee’s responsibility relates to member engagement and communications, with the aim being to equip members to make informed decisions where they choose to, but ensure suitable default policies.
A trustee for a DC scheme should:
- Understand the investment options available, ensure they are appropriate and provide an appropriate default option for members who do not make their own choice
- Communicate effectively with members, on key decision points for example, that what they get out is linked to what they put into the scheme
- Support members at all stages by providing information about their options and encouraging them to seek advice and/or guidance
- Assess whether the scheme provides value for members