UK Defined Contribution Pension Plan Beneficiaries Ill-Informed, Mercer Survey Funds

A recent survey by Mercer Investment Consulting found UK defined contribution scheme (plan) members have limited knowledge of investments and need more education to help them make investment choices. The survey of around 670 DC scheme members from 550 companies found that 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. The vast majority (90%) 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.”