The European corporate defined contribution (DC) pensions market will grow by 11.5% per annum to 2014, predicts research firm Cerulli.
While DC plans continue to become more sophisticated and target savers’ needs better, Cerulli believes that more work is needed on this product type and that European asset managers should seriously consider opportunities posed by these changes.
Of particular interest is the default fund in DC schemes, which accounts for 80% of savers. A number of developments are taking place in this area, including lifestyling, dynamic asset allocation and absolute return strategies.
Cerulli sees a move towards absolute return instead of relative return strategies due to dynamic asset allocation facilitating the incorporation of asset classes previously only seen in defined benefit (DB) plans, such as real estate and hedge funds.
Barbara Wall, editor of Cerulli Edge: Europe Edition, said: “Although the move toward more complex and better planned DC schemes has largely been confined to more mature markets, such as the Netherlands and the United Kingdom, the future must surely lie in this direction.”
The split between DC and DB schemes varies widely between the European markets, with the 2010 average standing at 30% DC and 70% DB.
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