Defined Contribution Pension Scheme Survey 2011
How does your DC pension scheme measure up?
Low employee engagement and a need for greater proactive management by Irish employers to address poor investment performance are among the findings of Deloitte’s inaugural Defined Contribution (DC) Pension Scheme Sponsor Survey 2011.
We are publishing this report against a market backdrop of on-going volatility, particularly in the equity markets.
Recent pension tax relief changes and the new pension levy are also having a direct impact, making this an opportune time to review and benchmark your DC pension scheme.
Our survey’s key findings include:
- Employee engagement is low. 36% of scheme sponsors think employees’ level of understanding and knowledge is poor. Of these, 77% believe employees are not interested in engaging with the planning process
- 34% of members have requested that their employers either reduce or cancel their AVCs since the changes to tax relief on pension contributions were announced
- The average employer contribution rate for 67% of respondents is between 5 and 10% of salary. Contribution rates to defined benefit (DB) schemes are typically double this range
- Over a quarter of respondents do not have a formal timetable in place to evaluate and benchmark the performance of the plan’s investments, and only 47% carry this process out annually
- 53% of those surveyed had reviewed their investment policy within the last year, and a further 39% have reviewed it within the last three years. However 51% of respondents have never replaced an investment fund due to poor performance – this after a decade where the typical managed fund has produced virtually no investment return whatsoever!
Proactive management is key – helping you benchmark your scheme
Independent reviews of existing DC benefit programmes will lead to better alignment of employer spend on their employees and improved retirement outcomes for members.
To this end, Deloitte has developed a five stage “fit for purpose” assessment for companies with DC plans, which focuses on the key areas of concern for their plans, identifying and implementing strategic solutions.
To download slides from our recent pension breakfast briefing, please click here. For a full copy of the survey results, please email Lucy Monaghan at firstname.lastname@example.org.