UK - The majority of contract-based defined contribution (DC) pension schemes in the FTSE 100 (68%) offer members a choice of 20 or more investment funds, according to Watson Wyatt.
Watson Wyatt's annual FTSE 100 DC Pension Scheme Survey found over 80% of members of contract schemes were invested in their plan's default option, indicating that increased choice did not necessarily mean an increased take up of the different funds. It concluded excessive choice of investment funds could lead to members making the wrong decision, increasing risk and costs.
Crispin Lace, senior investment consultant at Watson Wyatt, said: "This demonstrates a perverse situation where greater choice of investment funds leads to a greater reliance on the default option."
He added many of the companies surveyed had begun to scale back the range of funds offered.
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