Today
Mercer has launched the Mercer Optimiser Tool (MOT), a diagnostic tool the consultancy described as “designed to help trustees and governance committees improve the performance of their DC pension schemes, reduce the running costs and ensure their schemes continue to meet the needs of members”. Mercer said that the tool will also help them prepare for new guidance on DC governance expected from the Pensions Regulator (TPR).
According to Brian Henderson, a Principal in Mercer's DC consulting team, "More legislation on improving the governance of DC schemes is likely following the Investment Governance Group's consultation, and this will have a profound impact on how DC schemes are run.
"Trustees and governance committees should prepare for the tighter DC regulatory environment by reviewing the effectiveness of their schemes. Our DC MOT addresses 10 key areas concerning objective-setting, governance, investment strategy and fund choices, as well as member profiling and communications.
In Mercer's 2009 Global DC Survey, 47% of the 354 companies polled in the UK didn't have any formal DC governance policies in place for their DC plans. However, the 53% of companies that did have something in place tended to focus on accuracy in the administration of benefits and contributions, compliance with legislation and accuracy in member communications.
Those Ten areas include an assessment of:
1. What are your strategic objectives?
2. What can sponsors and trustees learn from profiling their members?
3. Are contribution strategies (the scheme's and members') sufficient to achieve benefit adequacy? What is benefit adequacy?
4. Is your current investment strategy fit for purpose?
5. Can one size really fit all?
6. Are members keeping their options up to date, reviewing funds and changing managers in a timely fashion?
7. Have sponsors and trustees considered some of the newer approaches to fund choices that are now friendlier for members and better at managing risk?
8. How insightful is the current monitoring of the scheme's investment options?
9. How effective is your communication in engaging your members?
10. Does the governance structure support the trustees in achieving their objectives?
More information is available at
http://www.mercer.com/summary.htm?idContent=1378750&siteLanguage=100