DC consultation – the end of the small DC scheme?

The DC consultation issued in September 2020 is now closed and is awaiting DWPs response. However, the proposal is that all the amendments within the consultation will be brought into force on 5 October 2021.

The consultation is hoping to accelerate the pace in which the market is consolidating addressing the issue that some of the smaller schemes are poorly governed, incur high charges and simply do not have the scale to achieve the benefits a larger scheme has with investing in a diverse range of assets, ultimately resulting in poorer member outcomes.

DC schemes already address the point of value for members (VFM) in the chairs report, but the consultation goes a step further setting out a framework with an annual value for money report at the center. If the scheme fails its VFM assessment there is a presumption that the trustees should initiate winding up the scheme, but certain exceptions do apply.

The consultation requirements cover DC and Hybrid schemes over 3 years old, but with under £100m of assets. This excludes DB schemes where the only DC assets are AVCs, Public sector schemes and GPPs.

Early legal advice is encouraged for Trustees to asses the position of their scheme.


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