Recent Study Reveals U.K. DC Pension Plans Need Better Member Outcomes
A 2015 survey of U.K. defined contribution (DC) pension plans reveals that there is a disconnect between what new initiatives they want to deliver and what they can actually provide. The Aon DC Survey 2015 revealed that out of 330 respondents from 297 U.K. DC pension plans, 57% of respondents feel that the top priority for DC schemes is better member outcomes, while 47% identified the need for specific communication goals and 45% advocated for increased member engagement. While these are impressive goals, the reality is that previous months of pushing new initiatives has taken valuable time away from planning how to build an infrastructure to meet the demands of these new initiatives.
One issue is a lack of management reporting. The survey indicated that only 16% of the respondents received information on how to manage outcomes, yet 90% of the respondents said that they receive regular information about investment performance. Further, a full 68% of the respondents had no knowledge of the expected replacement ratio for their members.
In terms of communication, the study revealed that 77% of the respondents believe that the employer should be responsible for educating and communicating with their employees, but 45% of the schemes rely on the pension provider to provide information to members.
Other concerns include drawdown solutions, which are lacking in many U.K. plans as only 43% of respondents said they had drawdown options in place, and the issue of educating members so that they may be more actively engaged in decision making was still prevalent.