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OECD report on default DC funds “misses the point”

The OECD has missed the point in calling for regulators to put a cap on the percentage of defined contribution pension schemes invested in risky assets according to an adviser.

The report from the OECD and Allianz Global Investors says that more attention should be paid to default options and investment choice including an equity ceiling to reduce losses in a market downturn.

But Richards Jacobs Pensions and Trustee Services director Richard Jacobs says the report does not address the root of the problems with default funds.

He says: “The OECD have identified a massive problem with default funds but all they are doing is substituting one model for another model.

“They need some form of active involvement from an IFA. The model is broken. There should be provision for workplace advice and talking to employees.”

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