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European DC pension plans take US example

A 52-country survey of defined contribution (DC) plans outside the US shows European plan sponsors adapting the US model to their own circumstances and objectives.

The survey, conducted by InterSec Research in London, showed that by the end of 1995, DC plans outside the US had US$450bn in assets, 45% of which was from Europe. The total figure is ex-pected to grow to US$1.3trn by 2002, a growth rate double that of defined benefit (DB) plans.

Emphasising that the most significant finding was the divergence from US practice, Stephen Oxley, managing director of InterSec in London says: What is surprising is the diversity of approach. Each country has its own culture of political, financial and economic forces shaping the future of pension funding."

The analysis revealed a DC de-bate in almost every country with many governments directly or indirectly providing the impetus for the shift, although it also found a general belief that DC is riskier for participants with many actuarial consultants advising against it.

Turning specifically to Germany, France and Italy, Oxley added: "In the newer markets that have previously been DB or PAYG you are going to see almost 100% DC, if and when these governments legislate for funded pension schemes.""

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