How DC schemes have evolved their investment and communications strategies following the pensions reforms
It goes without saying that the 2014 reforms were game changing. Now that schemes have had time to process the overhaul of the DC landscape, just how are these changes being implemented in reality?
Providing a sufficient retirement income is still the main purpose of pensions, but now there is a dizzying array of options causing member confusion. Default funds no longer necessarily glide towards an annuity, with cash lump sums and drawdown arrangements being thrown into the mix. Scheme managers and trustees are faced with making sure these options are both understood by their members, and that the tools and knowledge are there to help them make an informed decision.
Another issue coming to the fore is that members are now responsible for managing their own longevity risk, rather than relying on the pensions industry to do it on their behalf. To add to this, people are living longer.
The industry must act sooner rather than later to address this and ensure retirees are not left without sufficient income in their later years.
We at Pensions Insight, in association with State Street Global Advisors, wanted to know what schemes are thinking and where they are on their freedom and choice journeys. We surveyed more than 50 of the UK’s leading defined contribution schemes to find out how their members have reacted to this new universe of options and how scheme design is changing as a result. We were also interested to hear how schemes are using communications best practice to improve member engagement, and ultimately leave members with sufficient retirement provision.
We hope that you find the report as illuminating and thought-provoking as we do.
To download the report, click here.