U.K. Pensions Regulator urges DC plans to support participants amid market volatility

The Pensions Regulator urged trustees of U.K. defined contribution plans to support their employee participants amid concerns their investments’ value declined sharply due to market volatility.

In guidance published Thursday, TPR said the impact on participants who are close to retirement date could be more severe than on savers who are younger and early in their retirement savings journey.

TPR wants DC plan officials to communicate effectively to plan participants so they don’t make untimely decisions, according to a news release.

David Fairs, executive director of regulatory policy, analysis and advice at TPR, said in the news release that accompanied the guidance that the current economic environment introduced new challenges for DC trustees, who should consider whether their current governance and investment structures are adequate.

“There is no one-size-fits-all answer in these difficult times, and scheme specific circumstances are important. However, we expect all trustees to consider the issues raised in this statement and take appropriate action as part of their ongoing governance responsibilities,” Mr. Fairs added in the release.

The regulator said trustees should also ensure participants understand the risk of cash investments and the value of investments that provide long-term inflation protection.

Trustees should strengthen the governance and oversight of DC plans and ensure their investment strategies yield good retirement outcomes, TPR said.

For example, trustees should consider whether plans have sufficient scale, time and resources. Trustees should also ensure that their investment advisers are focused on participant outcomes rather than solely on costs, TPR said.