Making DC pensions arrangements more attractive



Defined Contribution (DC) is and will continue to be the predominant form of pension provision in the UK from here on.

DC will play a vital role in helping workers achieve a desirable and sustainable lifestyle in retirement though DC outcomes are wholly contingent on the level of contributions from the employee and employer and the return on this investment. However, as current contribution rates and accumulated pension savings are woefully inadequate, early stage employee engagement with their pension is essential.

Following the pension freedoms announced in last year’s Budget, retirees are now faced with a much wider range of options, making DC pension arrangements much more attractive to employees. However, there are risks – not only the risk to the DC retiree’s capital and its ability to generate sufficient growth and/or income but also longevity risk, given that most people underestimate their life expectancy. The impact of inflation, tax implications and passing on wealth are further considerations.

Employers are tasked with implementing auto-enrolment and appropriate pension provision for their employees, accompanied by a degree of governance over the scheme and their outsourced providers. There is an amount of administration required by companies to adhere to the legislation and this has been costly in terms of time and resource for many employers to date. However, this may lead to pensions having a more important role in the way in which employees view their remuneration. This aspect of employee reward may in turn influence a company’s ability to retain and attract talent. It is also in the interests of companies that their employees are able to retire at an appropriate age.

Columbia Threadneedle Investments is a provider of retirement investment solutions, designed to provide members with actively managed strategies that diversify their investments across a wide range of asset classes, so as to provide superior risk-adjusted returns over the longer-term. Our ultimate aim is to help members achieve a standard of living in retirement to match their expectations.

To discuss Multi Asset Solutions in more detail please email Andrew.Brown@columbiathreadneedle.com

Past performance is not a guide to future performance. The value of investments and any income is not guaranteed and can go down as well as up and may be affected by exchange rate fluctuations. This means that an investor may not get back the amount invested. This document is a marketing communication. The research and analysis included in this document have not been prepared in accordance with the legal requirements designed to promote its independence and have been produced by Threadneedle Investments for its own investment management activities, may have been acted upon prior to publication and is made available here incidentally. Any opinions expressed are made as at the date of publication but are subject to change without notice and should not be seen as investment advice. Information obtained from external sources is believed to be reliable but its accuracy or completeness cannot be guaranteed. This material is for information only and does not constitute an offer or solicitation of an order to buy or sell any securities or other financial instruments, or to provide investment advice or services. Issued by Threadneedle Investment Services Limited. Registered in England and Wales, Registered No. 3701768, Cannon Place, 78 Cannon Street, London, EC4N 6AG. Authorised and regulated in the UK by the Financial Conduct Authority. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.

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