UK DC plans could get access to costlier investment strategies

UK defined contribution (DC) plans could soon be able to access illiquid investment strategies in a higher price bracket as government officials consult on abolishing a fee cap for DC investments.

The potential removal of the fee cap was announced by Chancellor of the Exchequer Rishi Sunak during his recent Budget speech. The Treasury commented that the consultation to remove the current 0.75 per cent cap on annual management fees that defined contribution plans pay is now underway. However, there is yet no timetable available for a concrete decision.

Industry sources have been vocal, expressing doubt of whether the removal of the present regulatory barrier will encourage further DC plans to make an investment in renewable energy and infrastructure.

Consumers looking for impartial investment advice in Shropshire, Cheshire and other UK counties often look to wealth managers for specialist assistance. Able to offer expert advice on the implications of investment opportunities and explain them simply to clients, they can help those they serve avoid many common pitfalls faced by investors. All investments selected by wealth management firms reflect their clients’ attitudes towards risk.

Industry Concerns have been raised regarding the appropriate approaches for distributing proceeds gained from illiquid investments to any participants involved to ensure that retirement outcomes are fair and performance fees transparency.

Another issue commented on is that many defined contribution schemes involve investments through insurance providers who will not always accept illiquid assets, resulting in no changes from the fee cap being scrapped.

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