As part of the PP Campaign for Better DC Default options – launched in November last year (PP Online, 24 November, 2011) – we are looking to conduct interviews with schemes who have implemented default strategies they feel are innovative in order to help our readers learn from their peers’ experience.
In our interviews, we will look at what these schemes did, how they went about it, how it improved outcomes for members, the challenges they faced and how they overcame them.
If you manage a scheme and want to get involved – or know a scheme that we should approach – please contact: [email protected] for further details.
The DC default campaign will also aim to draw up a list of key considerations for any firm or trustee board to look at when reviewing their default fund or checking if it is still best of breed.
Further details of this part of our campaign will be published over the coming weeks.
So far, more than 20 individuals from key firms within the occupational DC sector have backed the campaign (PP Online, 24 November 2011).
The latest list of people backing the campaign – with comments as to why they believe a change in thinking is necessary – is as follows:
Alexander Forbes Financial Services head of delivery for defined contribution pensions and benefits Steve Watson:
The problem we see is that a number of members consider the default fund as a recommendation and as such do not engage after enrolment. With auto-enrolment being the antithesis of engagement, this can only get worse and will ultimately lead to greater levels of dissatisfaction at retirement.
It is therefore important that the default fund issue is considered in the wider context, i.e. the right default fund with the right level of contributions, both set bearing in mind the required outcome at retirement!
AllianceBernstein defined contribution investments director Tim Banks:
It is time for a change in thinking in DC investment default design – we need an evolution from traditional strategies to better serve member needs. This campaign can play a part in achieving that objective.
Aon Hewitt head of UK DC team Simon Davies:
It has never been more important to get the choice of default investment option right and we welcome this campaign, which can help all of us create better outcomes for DC members, and at the same time reduce the risk for scheme sponsors.