When you’re looking at your global retirement portfolio, how can you ensure your local defined contribution (DC) plans offer good value for money?
Optimizing defined contribution outcomes
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MICHAEL BROUGH: Develop DC markets, as in the US or parts of Western Europe, have very well established systems that have accumulated scale in terms of assets, but also in terms of membership headcount. These systems offer wide investment choices to employees, fiduciaries and sponsors. They may offer lifestyle de-risking strategies. And the large scale, allows relatively low or capped institutional fees and charges.
At the other end of the spectrum, we see DC plans in the developing world, brand new DC structures, either just established or about to be introduced. They have no scale of assets, they have no or very limited provider markets, no investment choices or lifestyles, few or no members yet and high sometimes very excessive initial costs.
In between these extremes, we see a very wide range in terms of size and maturity of DC options, investment choices, levels of fees, and charges and the sophistication of the administration service.