Almost nine in 10 defined contribution savers are in pension schemes which invest in at least one productive asset class, according to The Pensions Regulator.
Its data showed that 45% of defined benefit schemes, 57% of large DC schemes and 72% of DC master trusts hold some productive assets such as infrastructure, private equity or renewables.
The research also showed that large scale schemes are more aware and engaged with their governance compared with smaller schemes, which may put them in a stronger position to make informed decisions around diversified investments and environmental, social and governance.
The findings also suggest smaller schemes are at risk of not performing as well against TPR’s expectations on investment governance and governance more broadly. While many larger DC schemes hold productive assets, a sizeable proportion of small (57%) and micro schemes (70%) did not know if their scheme held assets in these classes. This lack of understanding could indicate poor governance standards, TPR said.
Nausicaa Delfas, chief executive of TPR, said: “We believe sound investment in diverse assets could improve outcomes for savers and generate growth for the UK economy. The two do not have to be in conflict.
“We want to help all schemes to be able to consider a full range of investment options, either through ensuring strong governance or by encouraging them to consolidate.”
TPR said it will continue to tackle poor governance in small schemes by probing how many schemes meet their legal duty to carry out a detailed Value for Members assessment; developing a Value for Money framework in partnership with Department for Work and Pensions and the Financial Conduct Authority; and introducing a more proactive supervisory approach to improve the quality of trusteeship, with a greater emphasis on providing value.
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