However, Carolyn Jones, head of proposition at Fidelity, expects trustees to become more proactive in offering flexibility once there is clarity in what members want and there are a greater number of solutions with which they can work.
“In a year’s time those numbers will be very different. Trustees are waiting to see what providers offer and what their members want; they are taking a cautious approach,” Jones says.
While trustees may be reluctant to offer flexibility in-house, there is appetite for helping members find a preferred alternative.
Xafinity’s Darlow says: “Trustees are keen to make members’ life easy and they are thinking about pointing to a master trust they are comfortable with. That makes sense and will become the norm where schemes aren’t going to provide the flexibility themselves.”
However, there are those that believe trustees should not run away from offering freedom and choice, and go so far as to say it may be their responsibility to do so.
Jonathan Reynolds, client director at independent trustee firm Capital Cranfield Trustees, says where a scheme has the governance budget and resources to take on the flexibilities then they should do exactly that.
Reynolds says: “The opportunities for members to make mistakes [with freedom and choice] is pretty obvious. We should want to provide structures that help limit that opportunity by providing good, clear simple structures that provide flexibility without [the member] having to jump ship. I don’t see any fundamental reason why DC trustees can’t offer excellent choices to their members.”
Reynolds concedes that trustees will need an appropriate level of governance in place if they are to work in their members’ best interests, but he does not see that as an ‘ insurmountable challenge’.
The impasse that has been created as a result of freedom and choice is unfortunate given the government’s intention to bring freedom to the retirement market. It is not surprising, however, given the uncertainty which blights members, trustees, employers, advisers and providers when it comes to making the ‘right’ decision. As more parties are willing to move the market forward, the new regime will start to gain the impetus it needs to take off, but for the time being the deadlock remains.
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