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Over four fifths
of Defined Contribution (DC) pension schemes have not carried out
a risk assessment within the last 12 months, says financial consultant
Watson Wyatt.
In Watson Wyatt’s DC Governance Practices survey only 19 per
cent of DC schemes claimed to have carried out a risk assessment.
“This is a low number given that the Pensions Regulator highlighted
back in April 2007 the imperative need for those involved in running
DC plans to understand the risks involved in DC and for them to
take action to mitigate these risks,” commented Gary Smith,
a senior DC consultant at Watson Wyatt.
Contract-based plans were found to be the least likely to have performed
a risk assessment in the last year, and Watson Wyatt says these
plans appear to have the furthest to go in terms of improving their
general governance.
The survey findings come hot on the heels of the International Organisation
for Pension Supervisors’ (IOPS) announcement that an increase
in DC governance would help alleviate fears surrounding the risks
DC members face.
Smith added that it is possible that schemes had carried out risk
assessments, but not in the last 12 months. “However, the
Regulator suggests that regular monitoring and reviewing is required
to ensure that the scheme is comfortable that all risks are identified,
and we would suggest that any risk assessment should be revisited
at least annually to identify changes.”
Watson Wyatt has released a ‘practical guide to the governance
of your DC plan’, which is available on request.
- Pensions Age
September 2008
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