EIOPA publishes research on default investment funds

Default investment funds are used by only 50% of members’ pension schemes, according to research by the European Insurance and Occupational Pensions Authority (EIOPA).

The survey, which was conducted as a follow-up to EIOPA’s advice to the European Commission on the review of institutions for occupational retirement provision (Iorps), looked into the practice of default investment options across the European Union.

The survey also found that:

  • Multiple investment options are quite common in both occupational and personal pension schemes.
  • The use of lifestyling options are very rare. Where used, these are mostly provided by an Iorp or a pension provider voluntarily, with no specific requirement or legislation.
  • Supervisors tend to get involved only where multiple investment choices or default options are a legal requirement, which means infrequently.
  • Although exact figures for the number of members that use default investment options are not available, there is a strong indication that, where default options are offered, the take-up is very high.

The EIOPA said: “EIOPA believes that well-designed default options and any de-risking solutions contained in them, as well as supervisory involvement pitched at the right level, are crucial determinants of the adequacy and protection of members’ retirement incomes in defined contribution schemes.”