The move towards daily trading has no basis in sound reason from a typical member’s perspective. It was born of competition between administrators who differentiated themselves from their peers based on the speed at which they invest/disinvest member contributions. This meant a shift from monthly to weekly and, ultimately, daily trading.

The perceived greater efficiency this created lured people into believing it must be good. Regulators, keenly focussed on promoting flexibility in pensions arrangements, certainly seem to have adopted this view, which is clear in the liquidity constraints placed on mutual fund structures such as UCITS funds and in how they regulate the pension provision market.

But in the rush for ever-more rapid trading, people were not thinking about the impact that trend would have on investment outcomes.

In reality, most people don’t make use of the flexibility today’s DC pension framework affords them. And if flexibility means lower returns, then that should also be explained to savers given the compromise they are being forced to make.

The vast majority of pension scheme members would probably find monthly trading acceptable. Evidence from around the industry suggests few trade more frequently than this, even when markets are behaving in a manner that should create considerable concern.