AEGON: DC schemes to become more popular

11 February 2010

Defined contribution (DC) pension schemes have increased in popularity over the last 20 years and are set to become yet more popular, according to a new report.

Findings from a study by the Investment Governance Group (IGG) have revealed that the number of people taking out DC schemes is set to soar after auto-enrolment is introduced in 2012.

However, according to the organisation, "DC pension provision shifts the risks largely onto individuals".

The report also set out best practice standards in a bid to improve engagement between employers and providers.

Rachel Vahey, head of pensions development at insurance firm AEGON, welcomed the report, saying: "The consultation has tried to nail down accountability for investment-making decisions.

"This is straightforward for trust-based schemes as, once the scheme has been set up, it is always the trustees' responsibility to make all the investment governance decisions."

Fears surrounding the volatility of the pensions market and the risks involved with DC schemes could result in a number of people look to schemes such as equity release to secure their retirement funding.

Such policies allow homeowners to access some of the funds that may be tied up in their property.