Towers Watson’s 2013 FTSE 100 Defined Contribution (DC) pension scheme survey captures how the UK’s leading companies are dealing with the latest developments in the UK’s pensions and what impact they may have on employers of all sizes in the near future.
Once again we are delighted that the report is based on data from over 90% of the FTSE 100. Whilst this is our ninth edition, this is the first report since employers have been legally required to automatically enroll their employees into a workplace pension. This is probably the biggest pensions change for a generation and has dramatically changed the pensions landscape for employers, employees and providers.
We have therefore taken the opportunity to refresh and refocus both the survey and the report. We have looked at contribution designs in greater detail, and have uncovered two very different schools of thought in DC design. In investment, we shed some light on the difference in practices between contract- and trust-based plans. DC is already the dominant form of future pension provision and if the rate of closure of defined benefit (DB) schemes seen in the recent past continued, then in a decade’s time there would be no FTSE 100 employers who offer DB to longer standing employees. Indeed, as this report was being drafted, two FTSE 100 ‘hard closure’ consultations were in the public domain, with DC being the preferred option for the future.
So with both auto-enrolment and DB closures driving expansion of members and assets, DC is set to explode in significance. At this critical juncture, we investigate what auto-enrolling does to take-up rates, we look at whether existing investment approaches are fit-for-purpose and we explore the topical issue of charges.