The firm says the move is a response to scientific research which indicates that too much choice can act as a disincentive to any investment decision-making.
Employers and trustees will now be able to create two fund ranges for their schemes, either core or additional funds, which will be available to members.
The core fund range comprises a small number of funds that employers and trustees feel are likely to appeal to the majority of scheme members.
The additional fund range is created from the remaining funds available to the scheme. Friends says these funds will likely better suit the more financially sophisticated members or those with more specialist investment requirements.
New bespoke schemes can encourage members to make their own investment decisions by choosing core and additional fund ranges. The firm says the fund ranges will be displayed in literature and online wherever a member has to make a fund choice, for example when switching funds.
Advisers and employers are able to see a snapshot of their core and additional funds at a glance. Friends says the new model helps members choose alternative funds when switching online.
Corporate pensions communications manager David Millar says the firm is trying to encourage people to engage with their pensions.
He says: “When members feel that choosing investment funds is too difficult they tend to make no choice at all and fall into the default fund. This is not a problem but we are trying to encourage people to engage with their pensions and make good decisions. Making an active choice of investment fund is one way to do this. Behavioural research indicates that too much choice is off putting and so we are offering a middle way, a clear way of presenting the funds available, split into core and additional fund ranges.”