Buzz: DC schemes failing to offer alternatives

clock • 1 min read

Almost six out of ten respondents thought defined contribution schemes could make better use of alternative assets, while just one in twenty disagreed. But many respondents admitted to being unsure of exactly how schemes could make these funds available to members.

"It might be appropriate for large target date funds, but they won't be appropriate for smaller funds or for individual 'pots'," said one contributor.

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Others worried that there were few funds that were suitable for use in DC while some said the class was too expensive for DC members to access.

"I'm not sure how they would make use of these alternatives," said one correspondent. "It's expensive and if we are going to have all this brouhaha about costs, this is a nonstarter."

But one contributor said providers in Denmark, Norway, the Netherlands and Germany demonstrated "effective use of alternative assets" with "balancing risk controls as the core measure".

A respondent who thought DC schemes in the UK were getting this just about right said: "They are rarely used and that is probably correct. They will be generally too expensive and complicated for all but the very largest schemes."

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