Speaker 0:
Hello and welcome to another episode of Consultant Corner with Me, Sam Rossiter. And today I'm joined by Karen Stewart, who is headed DC investment at Lyman's. Robinson, like Alan,

Speaker 1:
I So how did

Speaker 0:
you get Thank you s O kind of. Obviously, today we're gonna be talking about D. C. My first question is we've seen a shift recently from the cost of a scheme to value for money. And you tell us a bit more about that and also the role. But liquids complain about earlier,

Speaker 1:
absolutely s. I think. First, the foremost, really exciting time to be part of of what is a rapidly evolving DC workplace market in the UK, with lots of opportunity to improve outcomes way think there are three areas that really driving that cost of Ellie's shift that you mention on ill equipped is one of the really interesting solutions within not to make that happen

Speaker 1:
s o of those three things, I think one key one is the rising scale of assets for the D. C market. So we think that the D C schemes and aggregate by then domestic decade will represent about 1.3 trillion give or take have assets. So with that, really rapid growth in scale means a wider opportunity said to considering term investments on that means then opportunities potentially to improve outcomes, which is really helpful.

Speaker 1:
The second thing is, we've of course, seen some regular regulatory development in this area with the DWP's consultation, which is now closed. Was a really active, engaging process, but none The left steam there is very clear that the industry needs to shift it, shift it, send it stows away from cost onto value on outcomes in terms of framing not just investment decisions but the proposition of pension scheme or generally for members with a view to improving their outcome

Speaker 1:
on then finally, I think the three the third thing sorry is that in terms of the actions that are being taken, we're working with a number of pension providers on We know that increasingly, member outcomes not cost is being used as the primary decision making parameter when considering investment opportunities

Speaker 1:
on drink. That's really interesting because it means we could start to look at a liquid investments as part of that solution, clearly higher price point. But we think the prospect improve member retirement outcomes is material through both enhanced returns, where we think the potential is great, but also to be reduced risk through improved diversification as well, which can be material terms of long term savings.

Speaker 1:
So we think the opportunity is there, and we think that really the momentum is building in this cost of elevation.

Speaker 0:
Okay, on bears also recently been more focus on the D accumulation phase and the need to improve sophistication in this area. Can you tell us a bit more about that?

Speaker 1:
Absolutely. So I think with that rising scale that I'd mentioned Maura Maura, DC savers are going to rely on the D C savings with a built up a zzz, their primary source of income on financial stability and retirement on That's something that will just grow over time to relatively small parts today will grow too much larger policy. Individuals will need to see them through the remainder of their life on support, a good standard of living and retirement.

Speaker 1:
So without increasing demand independency, it means that we should start to place much more focus on the D cumulation offerings that are available to members to help hm Taylor to their needs. on deliver that allow important living standard that they're targeting and retirement. I think within there there's lots of room for

Speaker 1:
improvements and sophistication. S O, for example, in the management of sequencing risk, we can look at the wider opportunity set of investments s O, for example, strategies that are intended to manage day inside risk more explicitly have a really important role, we believe to play in an investment strategies that support the accumulation on it for individuals.

Speaker 0:
Okay, And we've seen just recently the approval of the first CDC scheme in the UK with Royal Mail. What do you think the impact will be on the wider DC market? Going forwards?

Speaker 1:
Yes, absolutely. I think. I think what it what it means is much needed innovation in the space of retirement offering. I think it's a fantastic undertaking together over the line by everyone involved, including Royal Mail Advisors. In getting to that stage, I think for the industry as a whole lots of lessons to learn, not just from the process they've gone through so far, but on a no ongoing basis. Is the CDC arrangement delivering the anticipated benefits in terms of outcomes in retirement

Speaker 1:
that were originally envisaged that be interesting to see how that pans out over time also really hope it paves the way for further innovation. Taking forward the idea of pulling, which can be really helpful in terms of improving outcomes. We think one area to sort of carve out within his pro building of long longevity risk,

Speaker 1:
which is something that is not really done to any great degree in the D. C. Market unless I suppose you consider annuities. But there are largely to fashion with more valuable, potentially more valuable alternatives now available. But nonetheless, we think looking at ways to pull

Speaker 1:
longevity risk in retirement could be helpful way not just to manage risk for individuals but again, another approach to improve their outcome in terms of those time staying in cover, saying General, very supportive of any innovation, lots of lessons to learn. And we must do that over time. But I really hope it signals, you know, an emerging trend of exploring other innovations that could be helpful to improve retirement outcomes for savers.

Speaker 0:
Mr. Chairman, Thanks for joining me.

Speaker 1:
Thank you very much.