Benefits December 19, 2006

UK Scheme Members Need Investment Education

December 19, 2006 (PLANSPONSOR.com) - A recent survey by Mercer Investment Consulting found UK defined contribution scheme members have limited knowledge of investments and need more education to help them make investment choices.
Reported by

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.

«