PLSA supports performance fee calculation adjustments

The Pensions and Lifetime Savings Association (PLSA) has commented on the government’s response to the ‘Incorporating performance fees within the charge cap’ consultation.

Joe Dabrowski, Deputy Director, Policy, PLSA, said: “We support the Government’s intent to facilitate DC schemes’ investment in the widest range of assets including, illiquid assets, private markets and other alternative investments, and maintenance of the charge cap. We therefore believe proposed calculation adjustments for performance fees and additional guidance on costs excluded from the charge cap while holding physical assets will provide clarity for schemes and aid those schemes which wish to add illiquid asset investment into their portfolio but have felt inhibited by current rules.

“However – as we set out in our submission and DWP’s recognises in their response – many other, structural factors are at play, including the cost and transparency of illiquid investments and the competitive and consolidating nature of the DC market so these proposals will only have a minor impact on asset allocation and there is unlikely to be a wholesale switch into illiquid investments.

“We are pleased to see the Government re-iterate that investment decisions are for trustees to make and will continue to support innovation of fee structures that fit better within DC schemes’ default arrangements, in order to facilitate investments which may unlock potential higher returns for pensions savers.

“Although it is clear that there are many challenges still to resolve, the PLSA supports measures that enable savers in workplace pensions to consider all their options including the potential benefit from the risk/return profile that illiquid assets can deliver. As part of the work in the Taskforce on Productive Finance, the PLSA is helping look at structural and perceived barriers to DB and DC schemes investing in illiquid assets, such as trustee skills and training.”

Mark Smith, Senior PR Manager
 020 7601 1726 |  [email protected]k

Steven Kennedy, PR Manager
 020 7601 1737 | 07713 073024 | [email protected]