On 12 January 2023, the Pensions Regulator ("TPR") published a guidance statement aimed at trustees of defined contribution ("DC") schemes outlining how they should communicate and provide support to members in light of the current economic climate. In particular, trustees are encouraged to help members understand the implications of a reduction in the value of their savings, and to caution members against making hasty decisions which could lead to poorer outcomes and in some cases result in them being scammed. The guidance statement also details how trustees can strengthen governance and oversight of DC schemes and ensure that their investment strategies facilitate stronger member outcomes.


The guidance statement follows previous guidance issued by TPR which focused on the issues it expects trustees to consider when managing investment and liquidity risks in relation to their liability driven investment ("LDI") funds. Whilst DC schemes are not directly impacted by the issues affecting LDI, DC members are not immune to market movements and TPR acknowledges that significant market volatility from equities and falling bond values (because of corresponding rising yields), along with increases in inflation and interest rates, has affected those accessing their pension savings. Indeed, the guidance statement was published on the same day that the Pensions and Lifetime Savings Association updated its Retirement Living Standards and warned that retirees seeking to achieve a basic standard of living will need to save significantly more to cover an anticipated 20% increase in their expenditure due to high inflation.

Improving governance and investment arrangements

• Trustees of DC schemes should consider whether their current governance structure is suitable by looking at how investment risks are assessed, how investment decisions are made and whether their scheme has sufficient time, resource and scale to effectively govern any DC arrangements.

• It is vital that trustees assess the performance of their investment advisers against agreed objectives and review the proactivity of their advice, ensuring that the focus is on delivering good outcomes for members rather than solely concentrating on costs and charges.

• TPR expects trustees to understand their membership demographic in order to optimise scheme design and member outcomes. Obtaining member data from their scheme administrator will allow trustees to analyse behavioural trends and inform future decisions.

• Trustees should ensure that the investment options (default and self-select) available to members remain suitable and consider how market conditions might present new risks and opportunities. In addition, trustees are urged to monitor the performance of individual funds against objectives and industry benchmarks in order to assess their ongoing suitability.

• It is also important for trustees to review how well their current investment holdings protect savers from high inflation and to warn members of the risk of choosing cash investments and the value of considering investments which provide long-term inflation protection.

Strengthening member communication and support

• Given the significant movements in the market, trustees should “act now” to ensure member expectations are better aligned with where they are invested. In this regard, trustees should help members understand what recent performance means for their individual circumstances. This is particularly important for those approaching retirement, or close to the point where they can withdraw cash.

• Trustees should ensure that members have enough information to make informed decisions about their retirement savings and TPR notes that additional information may need to be provided alongside the annual benefit statement. TPR suggests encouraging members to use modelling tools such as those provided by MoneyHelper and to check any pensions they have with previous employers through the Pension Tracing Service. Another option could be for trustees to provide members with a range of illustrations showing different outcomes and options that could be taken to protect and boost retirement funds at different points in the journey to retirement.

Next steps

Although many of the key messages in the guidance statement are taken from the DC code of practice and guidance on investment governance and communicating and reporting, the current economic environment introduces new challenges for trustees of DC schemes which require to be carefully considered and proactively addressed. Trustees are encouraged to consider the issues raised in the guidance statement and devise an appropriate action plan to ensure that members are supported, and internal governance procedures deliver positive outcomes for members.


Juliet Bayne


Angela Walker

Trainee Solicitor