Pension scale rules should recognise pooled assets to avoid unnecessary consolidation, TISA warns

The Investing and Saving Alliance (TISA) has called for pension scale rules to recognise pooled assets amid concerns that effective bespoke arrangements could be forced to merge.

It said the Government should assess scale across common funds and investments held under different default arrangements, rather than measuring each default separately.

In its response to the Department for Work and Pensions’ (DWP) discussion paper on scale policy, TISA supported the main principle but said it must work alongside wider defined contribution (DC) pension reforms.

It warned that proposed value for money chain-linking rules could discourage providers from taking on weaker defaults if this affected the receiving arrangement’s performance assessment.

Renny Biggins, head of policy for products and long-term savings at TISA, said: “Greater scale can deliver real benefits for pension savers but bigger does not automatically mean better. 

“Many bespoke arrangements are designed around the particular needs of employers and their workforces while already benefiting from scale through the same underlying investment funds.

“Forcing those arrangements into a single default simply to meet a scale requirement could remove useful tailoring without creating any additional benefit for members.”

Biggins added: “It could even encourage some employers to move towards Single Employer Trusts to regain greater control, increasing fragmentation rather than reducing it.