Only one UK firm in 20 plans to replace existing pension arrangements with stakeholder, according to JP Morgan Fleming Asset Management.
The investment house said over 60% of companies are choosing to simply use or modify their existing scheme arrangements to meet stakeholder requirements. Also with trustees increasingly recognising their fiduciary duties to members, it is becoming evident that employers believe the investment managers can help to meet many of these responsibilities.
These are the findings of the Defined Contribution Annual Industry Survey 2001, run by JP Morgan Fleming Asset Management, in conjunction with Professional Pensions.
For the second year running, JP Morgan Fleming wrote to the top 350 companies and replies were received from a broad cross-section of companies that represented more than £175bn in UK pension scheme assets.
The annual survey is a major initiative to build up a picture of trends within the industry and is currently the most up-to-date analysis on what the top UK companies are doing in response to stakeholder.
The survey found that while stakeholder pensions will have an impact on the market, it might not be to the scale that was originally envisioned.
JP Morgan Fleming’s head of UK institutional business, Arno Kitts, said: “It is quite apparent that many of the top UK companies are in the first instance deciding to modify their existing arrangements, rather than looking to the myriad of stakeholder products now available to meet the new requirements.
“It was also interesting to note that 6% of survey respondents still do not know how they will respond to stakeholder.”
The survey also shows that companies believe the role of the investment manager is becoming more and more important. Employers would like investment managers to provide sufficient educational tools, information and services to enable members to make informed and appropriate investment decisions for their pension. For example, freephone call centres, factsheets, on site member presentations and an Internet site designed specifically for DC members.
JP Morgan Fleming’s head of DC communications, Caroline Johnston, commented: “Eighty percent of survey respondents believe the internet plays an important role in communications.
However, bearing this point in mind, nearly 90% of respondents still believe hard copy communications are vital, as many employees still do not have access to the Internet at work. To compete in the DC pensions market, investment managers need to be able to provide flexible, clear and concise member services through a variety of communications media.”
A report highlighting the findings of this year’s DC survey is available from JP Morgan Fleming DC relationship managers Julian Lyne and Karen Roberton. Contact them on 020 7742 3228 and 020 7742 5076 respectively or visit them at the NAPF conference, stand number 85.
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