84% of DC pensions have a default option

The vast majority (84%) of respondents with a defined contribution (DC) pension scheme offer their workforce a default investment option, according to Employee Benefits/Capita Pensions Research 2013.

The research, conducted among 370 HR and benefits managers, found that just 16% of respondents that offer a DC plan do not.

A default investment option is the selection of funds into which employees’ investments are placed if staff do not proactively select funds themselves.

Auto-enrolment rules state that qualifying pension schemes must have a default investment option in place, because employees cannot be required to make an active fund choice when being automatically enrolled into their employer’s pension scheme.

The proportion of respondents that understand their default investment strategy appears to be on the increase. Some 94% of respondents grasp their organisation’s default investment strategy, compared with 87% in the 2012 research.

And 100% of respondents offering a DC plan that have gone through auto-enrolment say they broadly grasp their organisation’s default investment strategy.

Proportion of defined contribution plans with a default investment fund

Proportion of defined contribution plans with a default investment fund
Sample: All respondents responsible for pensions that offer a DC plan (304)
that have a DC plan

Respondents’ understanding of default investment strategies (2013)

Respondents’ understanding of default investment strategies (2013)
Sample: All respondents responsible for pensions (253)

Respondents’ understanding of default investment strategies (2012)

Respondents’ understanding of default investment strategies (2012)

Sample: All respondents responsible for pensions (53)

Read the full version of Employee Benefits/Capita Pensions Research 2013.