81% vote in favour of the increased flexibility
Schroders’ latest UK Defined Contribution (DC) opinion polli , undertaken earlier this month, provides a snapshot of the key decisions being considered by UK DC pension trustees and consultants following the UK’s 2014 spring budget and DC charge cap announcement.
Overwhelmingly 81% of those surveyed believed that ‘the increased flexibility announced in the spring 2014 Budget’ was a good thing for UK DC Pensions. Amongst the comments received one participant said that they believe it removes a barrier to pensions savings and the perceived unattractiveness of annuities.
When asked ‘will you be reviewing your default investment strategy in light of the budget and charge cap announcement?’ over 82% of the respondents said yes. One of the reasons cited for the review was to create pre-retirement options that better match the choices that members are likely to make at retirement.
Stephen Bowles, Head of Defined Contribution at Schroders commented:
“This is the first snapshot survey we have undertaken since the significant changes announced earlier this year. We are pleased that increased flexibility has been seen as a positive move and that default investment strategies are being reviewed in light of these announcements. It’s incredibly important that defined contribution schemes have the right pre-retirement strategies in place for their members.”
Participants were asked about annuities and specifically ‘will annuities still have a part of play in retirement planning for DC members’. 93% said yes, out of those that said yes 46% commented that it would play a bigger part at a different/later stage. Participants cited annuities as a safe and predictable way to secure income and that some pensioners will think that security of income is worth paying for. Those that commented annuities would be appropriate at a different/later stage said that people may elect to work part-time over the age of 65.
Taking a look at the latest DC charge cap announcement, the question ‘Do you think that the 75 basis points cap on charges will lead to fewer outcome based investment solutions in DC schemes?’ split the audience 50/50. Of the 50% that said yes, one participant commented that charge cap will constrain the quality of advice given.
The last question looked at default investment strategies, specifically asking ‘Do you think that DC schemes will need to have multiple default investment strategies to target different outcomes – i.e annuity, cash and drawdown?’ overwhelmingly 87% answered yes.
i The Schroders snap shot UK DC survey was undertaken in May 2014 and included participation from approximately 100 participants.
For further information, please contact:
Estelle Bibby, Senior PR, Schroders
Tel: +44 (0)20 7658 3431 /email@example.com
Charlotte Banks, PR Manager, Schroders
Tel: +44 (0)20 7658 2589 / firstname.lastname@example.org
Notes to Editors
For trade press only. To view the latest press releases from Schroders visit: http://ir.schroders.com/media
Schroders is a global asset management company with £268.0 billion (EUR324.1 billion/$446.8 billion) under management as at 31 March 2014. Our clients are major financial institutions including pension funds, banks and insurance companies, local and public authorities, governments, charities, high net worth individuals and retail investors.
With one of the largest networks of offices of any dedicated asset management company, we operate from 37 offices in 27 countries across Europe, the Americas, Asia and the Middle East. Schroders has developed under stable ownership for over 200 years and long-term thinking governs our approach to investing, building client relationships and growing our business.
Further information about Schroders can be found at www.schroders.com.
Issued by Schroder Investment Management Ltd, which is authorised and regulated by the Financial Conduct Authority. For regular updates by e-mail please register online at www.schroders.com for our alerting service.
- What will the world look like after Covid-19?
- ECB super-sizes asset purchases as deflation fears return
- A new social contract - how are companies treating their employees as the Covid-19 crisis unfolds?
- Benchmark Capital invests in specialist retirement planning firm - TRPP
- Jamie Murray and Schroders team up to host the UK’s first ‘Behind-Closed-Doors’ indoor tennis tournament
- Covid-19 poses temporary setback to the energy transition