NAPF Investment Conference: Employers with DC pensions told to limit fund choice

Employers with defined contribution (DC) schemes have been told to limit fund choices to a small number and to provide effective financial education to help employees get to grips with their necessary investment decisions.

Alistair Byrne, senior lecturer in finance at the University of Edinburgh, told delegates at the National Association of Pension Funds (NAPF) Investment Conference, that restricting fund choice for staff makes the information more manageable for them.

He said: “High fund choice is not the mechanism to get high pension scheme take up among employees. By the time an employer offers 20 schemes it becomes too difficult to manage. Employees will get confused and go into a default option.”

Commenting on Byrne’s findings, Moira Beckwith, vice president of UK Benefits at GlaxoSmithKline (GSK), said that employer education is important to make sure staff invest in the best pension fund for them. She said: “A range of choice will confuse employees. However, the employer is still the main source of education and information for employees and still largely trusted by employees. The employer is best placed to assist employee savings.”