UK - Defined contribution schemes are increasingly becoming the main focus of attention for employers and trustees, new research shows.
But one leading provider claims the fundamental issue remains the amount of financial education and advice employees receive.
Watson Wyatt’s research found that 80% of FTSE100 firms now provided a DC scheme for at least some of their employees and that, as consequence, trustees were beginning to pay more attention to these schemes as their assets grew.
Watson Wyatt partner Kevin Stratford said: “Initially, DC schemes had few members and little in the way of assets and so most employer and trustee attention understandably continued to be directed at the final salary pension schemes.
“But now many DC plans have significant numbers of members with sizeable assets under management. For this reason many firms are likely to review their DC schemes in the next year or so to ensure they are meeting employer and employee expectations.”
But Invesco Pensions chief executive David Butcher said the real issue was to get employers to educate their staff.
Butcher warned: “Given that the overarching trend in the pensions market is the shift from DB to DC the fundamental issue that we should be addressing is not whether trustees are increasing their asset allocation remit, it is to what extent employers are delivering financial education and advice to their employees.
“It doesnít matter what area of pensions it is, the issue it always comes back to is how to educate and empower and motivate employees to get back into the savings habit.”
The Watson Wyatt survey revealed wide variations in scheme design structure and investment options ñ ranging from no choice to over 30 fund options. Employee take-up rates also varied widely - from 2% to 100%.
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