The majority of UK defined contribution (DC) fund members are investing assets in the scheme’s default option, despite the average number of investment options exceeding a dozen, according to a survey by the National Association of Pension Funds (NAPF).

The industry association’s latest annual survey, which covered nearly 1m DC members with £11bn (€13.2bn) in assets, found that 94% of schemes offered members a default option – with 80% of members opting for the fund.

Joanne Segars, chief executive at the NAPF, said: “With 80% of DC members remaining in a default fund, the fund’s design and investment strategy are crucial.”

“But charges also affect member outcomes – it is important that charges are both transparent and reasonable, and, while the average charge was 0.46%, the range in this year’s survey was wide.”

The survey found that more than one-third of DC schemes chose a passive tracker fund as a means of investing, while the number of schemes’ multi-asset funds rose by 7 percentage points to 30% over the previous year.

It also found that nearly four-fifths, 79%, levied an annual management charge, although, as noted by Segars, the cost varied significantly between schemes – from 0.004% to 1.2%.

Examining the investment strategy employed by the nearly £700bn in defined benefit (DB) assets covered by the survey, the NAPF also found that the sector had continued to diversify, lowering UK equity exposure by 1.1 percentage points to 8.8%.

More than one-third of DB funds moved into commercial real estate, and 23% explored infrastructure investments for the first time.

Funds also showed an increasing interest in index-linked Gilts, increasing exposure while keeping overall fixed income exposure stable.

“In an economic climate of long-term low interest rates, funds are considering how to broaden their investments,” said Segars.

“The NAPF has argued strongly for some time that it should be easier for institutional investors to invest in infrastructure as an asset class, and our survey shows growing member interest in this form of investment.”