UK – UK companies with defined contribution schemes are providing employees with an increasingly wide choice of investment funds, says consultants Watson Wyatt.

More than 50% of those companies surveyed this year offer six or more investment fund options, and only 14% offer no choice of investment. In the 2000 survey, only 25% of the schemes offered six or more options, and nearly as many offered no choice at all.

It can be argued that the wider choice is a direct result of an increase in stakeholder plans – which tend to provide more investment options, but the survey also found that pension trustees are generally keener to offer greater choice to members.

The most popular type of investment funds available to DC scheme members are UK equities (offered by 70% of schemes), global equities (67% of schemes), and gilts, bonds or annuity protection funds (65%).

Lifestyle strategies are also very popular says the report, whereby the investment strategy is changed over time. The issue here, says Colin Singer, partner at Watson Wyatt, is that plan sponsors and trustees need “to get the right balance between the intended benefits from such an approach and keeping members sufficiently interested in their pension scheme investments to review the strategy for time to time as their situation or circumstances change.”


Topics