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Defined Contribution


Defined Contribution

Why is 'now' the time to focus on improving Defined Contribution member outcomes?

More UK workers than ever before are saving for retirement via Defined Contribution (DC) rather than Defined Benefit (DB) pension plans. The Pensions Policy Institute estimates that in 2013 there are approximately 8 million private sector workers building up DC benefits, compared to approximately 1m building up DB benefits. The advent of auto-enrolment, which to date is seeing very high take-up rates, will only serve to increase this disparity.

These growing numbers of DC members face a tremendous retirement income adequacy gap:

• Insufficient savings
• Sub-optimal investment choices
• Poor access to the best-priced annuities
• Growing retirement income caused by increasing post-retirement longevity and rising long term care costs

We have been working closely with employers and trustees of DC plans for many years. We see that many are taking up the current challenges and opportunities but these are not insignificant. As a nation we cannot afford to fail to meet these challenges and take the opportunities to help the emerging generations of workers who may not currently be financially prepared for retirement.

It is time to bring rigour to DC plan design, communication and governance in order to ensure better member outcomes. This is a goal shared by the Government and the Pensions Regulator, both of whom are placing increasing focus on DC plans, their management and their governance.

This is why we have created Achieving better member outcomes - a practical guide to DC pensions. Shedding light on the key challenges, the guide helps you identify what you are trying to achieve for your DC members and deliver a positive impact on their outcomes. The guide examines the current situation and existing challenges, and suggests potential solutions, with clear action points for employers and trustees.

Please click here to download a copy of Achieving better member outcomes - a practical guide to DC pensions.

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