The EIOPA chairman recently set out three ‘fundamentals’ to improve EU pensions (strong governance, enhanced sustainability and full transparency). European Pensions asks: What else would you add to the list?
Strong governance is obviously paramount, particularly when looking at the suitability of investments, but can pension schemes be satisfied if the funds chosen are constrained in their structure and therefore have a greater chance of delivering sub-optimal outcomes for their members?
“Being outcome driven needs to be on the list, which means that the funds offered to scheme members are not constrained in their structure and provide the best opportunity of generating the most appropriate outcome at retirement. “DC fund solutions are becoming more complex and will continue to evolve as legislation changes across jurisdictions. Default funds are all trending towards complex fund of funds solutions and schemes are looking for more complex blended fund options, which cannot be easily catered for on the traditional investment accounting platforms. “With the inevitable continued growth in this area, it is imperative that system providers and platforms develop their capabilities to remove the current constraints faced, thus enabling pension schemes to deliver funds that both meet their desired outcomes, and can be delivered within an acceptable cost base to meet the growing pressures of reduced costs in the DC world.” Milestone Group head of life, pensions and platform, Kevin Openshaw
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