According to a Mercer press release, the survey of around 670 DC scheme members from around 550 companies found only 33% of respondents comprehend the principle of cash funds, while just 25% and 26% understand how equity and bond funds work, respectively. Nearly two-thirds of respondents (64%) said they believe they have a reasonably good knowledge of how their pension builds in value over time, but 80% are unsure of what an annuity is.
In addition, 90% of respondents said they would find it easier to choose among investment options if the funds had less technical, more descriptive names like ‘high growth/high risk’ and ‘low growth/low risk’. However, the majority of those surveyed were not sure about emotive fund names like ‘adventurous’ or ‘cautious.’
Other survey findings, according to the release, included:
- 35% said they would switch their savings between investment funds at some point to produce the best possible pension.
- 38% of those surveyed said they would only want their money to be invested with a fund manager they had heard of, although the majority of respondents would consider managers they did not know if the performance record was positive.