Recent proposals from Steve Webb, the UK’s pensions minister, to pool employer-sponsored defined contribution pension schemes in an attempt to improve retirement income could be fraught with risk for members.

The approach, which would be similar to collective defined contribution (CDC) schemes, already well established in the Netherlands, would pool the schemes of big employers. This would create economies of scale, reducing costs and fees along the investment chain.

The proposals come as many trustees face a yawning gap between assets and liabilities and many defined benefit (DB) pension schemes are closing.

  FT