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Defined Contribution

U.K. seeks input on efforts to add illiquid investments to DC plans

The U.K. government is seeking views from executives at defined contribution plans and retirement providers on how to facilitate DC plan investment in less liquid assets.

Under the consultation announced Tuesday, the Department for Work and Pensions is seeking comment on three proposals:

DC plan executives welcomed the spotlight on consolidation.

"Pension fund management is not a cottage industry. It demands economies of scale. Pension scheme members would be better served by fewer, much larger schemes, run in the interests of their members and able to leverage the economies that come with genuine scale," Gregg McClymont, director of policy at B&CE, provider of the 4 billion ($5.2 billion) People's Pension,West Sussex, England, said in an emailed comment.

Regarding the fee section, the DWP said in the consultation document that while "we occasionally hear the suggestion that the DC automatic enrollment fee cap may be a barrier, evidence suggests that this is not the case, except for the smallest retirement plans."

A survey conducted by the DWP in 2016 found that the average fee on illiquid investments was within the annual 0.75% fee cap, at between 0.38% and 0.54% of assets under management.

The consultation ends April 1.