Almost half of defined contribution pension schemes are considering changing their structure, a survey has found.
Aon's DC Pension Scheme Survey spoke to 214 schemes with combined assets of over £60bn and with more than one million members.
As well as finding 47 per cent are considering changes to their DC structure, it found 65 per cent of those running pension schemes do not know how much a typical member can expect at retirement.
Ben Roe, senior partner and head of DC consulting, at Aon said 61 per cent of schemes were focussed on 'good value' but was concerned two-thirds of schemes do not know what this means for the expected pension outcomes of their scheme members.
He added: "With the amount of continual change in the UK pension landscape, it can be challenging to prioritise the ‘important’ from the ‘urgent’, and to move from ensuring regulatory boxes are ticked, to focusing on activity that makes the most improvement to outcomes for DC savers. That’s why it’s encouraging to see the continued prioritisation of understanding and improving member outcomes."
Of those asked, while 70 per cent said they monitor investment fund performance, just 29 per cent monitored what this meant in aggregate for a member invested in a default scheme.
When it came to financial advisers, 35 per cent said they currently have a preferred firm to support members at retirement, with a further 15 percent planning to do so.
Most DC schemes reported that less than 10 per cent of members have selected their own target retirement age, although 40 per cent do not measure this.
Steven Leigh, associate partner at Aon said: "The use of ‘defaults’ in DC schemes has generally been effective in getting people to save at a basic level in their DC pension through to retirement.
"But currently there is no default decumulation solution, so while the introduction of pensions freedoms allowed savers choice around how they take their DC benefits, it has meant greater responsibility being placed on the individual.
"When the ‘crutch’ of suitable defaults falls away - as it does at retirement when faced with this choice - effective member support is crucial in reducing the risk of DC members undoing years of good work by making bad decisions at retirement.
“It is encouraging to see from the survey that a fairly large proportion of schemes have different types of support in place. This is key as quality support through to retirement will maximise the chances that most members make their own informed choices for better outcomes.”
More than 60 per cent of schemes had a drawdown option for members, but 25 per cent still have no plans to offer one, despite most basing their default investment on their members accessing savings in this way.
tara.o'connor@ft.com
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