More work is required to help defined contribution (DC) scheme members build their funds, experts said at a Pension Investment Academy (PIA) seminar.

The speakers at the event discussed how to deliver better outcomes for DC members and said that this could be achieved by improved lifestyling techniques and a better anticipation of, and reaction to, volatility and movements in the markets.

The National Employment Savings Trust (NEST) director of investment research Rudyard Ekindi and BNY Mellon head of retirement Catherine Doyle discussed ways that DC schemes could provide a more secure and reliable pensions savings vehicle with the help of improved strategies and better member engagement.

Doyle said to an audience representing over £87bn in UK pension scheme assets that since DC is becoming more important, it is important to challenge the assumptions used for setting default lifestyling policy, as this can impact member outcome.

Based to research by BNY Mellon and Cass Business School, Doyle said that an asset allocation strategy based on a member's proximity to a defined retirement income target was the best step to take, rather than sticking to a mechanistic lifestyle policy that automatically switches assets a specific number of years before an expected retirement date.

From the discussion that followed the presentations, many contributors expressed that while it was important that schemes engage with their membership to ascertain appropriate risk tolerances, ultimately trustees and employers have the responsibility to establish the most appropriate default strategies for their membership.

Trevor Cook, PIA executive director, said: "Whilst member engagement is a commonly-used term, it is clear from the speakers' experience and the comments that followed that more needs to be done to design better default strategies for tomorrow's DC members. It is no longer appropriate to assume that current strategies will work in the future."

First published 02.05.2013

monique_simpson@wilmington.co.uk