UK - A bewildering explosion of investment choices, mutating with-profits funds and poor returns are over-complicating the additional voluntary contributions market, a new survey shows.
Consultant Hewitt Bacon & Woodrow – in its 21st annual AVC survey – confirms that trustees selecting and monitoring AVC providers face potential confusion regarding the type of product offered to members as the labelling of products becomes ever more confusing.
However, the range and quality of communication and educational material on offer from providers continues to improve. And there are signs that the significant investment in administrative systems is starting to pay dividends.
Associate Chris Cairns said: “The average AVC scheme now offers members a choice of 13 different funds, up from 11 last year.
“AVC providers have wholeheartedly embraced the idea of offering choice and half of them now offer more than 30 funds, with three-quarters offering external fund manager links.
“However, there is evidence that this wide range of funds is in danger of overwhelming members, and trustees need to consider offering a more sensible limited choice of investment options.
“Too much choice and members may decide not to invest; this is reflected in a much smaller number of funds actually used by members, and in the lack of growth in the average level of AVCs paid over the past three years.”
The report surveyed 27 AVC providers and 183 AVC schemes.
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