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Pension trustees under pressure on fund choice

Trustees could face problems if they do not make members aware of the investment cho- ices open to them within their pension scheme.

Up to 90 per cent of pension scheme members fail to select their own investment strategy and just opt for the default fund, according to research by Aon Consulting.

Much of this is believed to be down to a lack of understanding on behalf of pension scheme members but Aon head of defined contribution Paul Macro says trustees are likely to face increased pressure to present information about the investment opt- ions that are open to scheme members.

Key to this, he says, is the need to encourage members to assess their individual attitude to risk and select their investment approach accordingly. For example, most balanced default funds will offer exposure to global equities, which some members may not favour.

Aon is hosting a series of conferences on the role of trustees in educating mem- bers in November in Leeds, Birmingham and London, which are free to attendees.

Macro says: “Trustees need to find an alternative approach to communicating investment choices to members as they simply do not understand the descriptions commonly used and therefore blindly accept the default fund.

“By taking this approach, members will be able to make more informed decisions, thereby reducing the reliance on one default fund. Comb- ining this with a review of the funds offered by trust- ees, members should be able to benefit from funds that are more appropriate to their own circumstances.”


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