A stark disconnect is present between scheme members expectations and what schemes can actually deliver in reality, according to research by Aon.
According to research published by the firm today (24 November) very few trust-based schemes intend offering access to a full drawdown solution.
Less than half - 43 per cent - of the respondents had either a preferred drawdown solution in place or were currently developing one.
This is in contrast with the results of the Aon and Cass Business School 2014 members survey which highlighted that 50 per cent of members are likely to need an income drawdown solution.
Additionally, 57 per cent respondents said achieving better member outcomes was the top priority in their scheme’s business plan.
Despite this, the same research showed that there was a disconnect between this goal and demonstrable results, with many schemes lacking the knowledge and management reporting needed to facilitate an improvement in outcomes.
The research was formed from a total of 330 responses which represented a total of 297 schemes with nearly 1.2m members and just over £33bn of defined contribution assets.
Responses from the survey showed only 16 per cent of respondents receive regular management information on outcomes, while 90 per cent receive information on investment performance.
A further 68 per cent of those surveyed had no knowledge of the expected replacement ratio for their members, a key summary measure of retirement income, which looks at a member’s retirement income as a proportion of pre-retirement earnings.
Alongside the first major objective identified by schemes in their business plans - achieving better member outcomes, two further objectives were identified.
These were specific communication goals at 46 per cent and evidence of increased member engagement at 45 per cent.
Sophia Singleton, partner and head of DC Consulting at Aon Hewitt, said: “DC schemes are emerging from a busy 18 months during which many have implemented major initiatives such as auto-enrolment and pensions freedom.
“For many schemes, ensuring they are able to meet the demands of these major initiatives has absorbed their full resource and attention.
“Now is the time to re-set the DC agenda. If schemes are serious about the ambition to achieve better member outcomes, then they need to start setting clear targets and putting plans in place to achieve them.
“They must also set and measure themselves against KPIs to ensure that their intentions become reality.”
ruth.gillbe@ft.com