UK - Too much choice can be a bad thing when it comes to pensions, according to Aon Hewitt.

A recent survey by the consultant found that more than 60% of UK employers offer more than 20 investment options to members of defined contribution (DC) schemes, while 12% offer no default investment option.

Aon Hewitt warned that such a broad range of investment choice, without the necessary guidance, could be highly confusing.

Its research also found that employers were still introducing new investment options.

John Foster, DC consultant at Aon Hewitt, said: "While at a surface level, introducing greater choice is seen as a positive step by employers, this doesn't necessarily encourage scheme members to understand and fully value their pension.  

"Being faced with so many investment options can be confusing and overwhelming - to the extent that some members will end up making no choice, or perhaps worse, make a random choice."

Given this amount of choice, it would be "sensible" to provide a default option and, more important, the necessary governance framework to ensure that, as funds are added, others are removed if they cease to perform, Foster said.

"We as a society cannot afford - quite literally - for companies not to maximise their workers' chances of understanding and getting the most from their pension," he said.

In other news, liabilities for UK corporate pension schemes have largely held steady at £1.4trn (€1.6trn), according to Xafinity.

Deficits across UK occupational pension schemes hovered around the £370bn mark in March, continuing a trend seen over the previous two months, with the FTSE 100 closing roughly 85 points off its level from the beginning of March.
 
Hugh Creasy, director at Xafinity Corporate Solutions, said: "You would have to go back four years to find such a becalmed first quarter of the year.

"Pension costs have been remarkably stable, and even the £40bn wiped off pension scheme equity investments during mid-month has largely been made good as equity markets rally."

On inflation, Creasy pointed out that the retail price index had surpassed 5% this month - with the consumer price index not far behind.

"While this does not come as a great surprise, it will be starting to generate higher benefits for scheme members," he said.

"In turn, we can expect to see larger deficits for those pension schemes which have not protected themselves from inflation."

Finally, the Pension Protection Fund (PPF) set out its goals for the next few years, stating it aim to return close to 2% a year in excess of its liabilities.

The lifeboat scheme also said this would result in further tenders, as it looked to implement a more "proactive" investment strategy.

The scheme's current timetable allows for returns of 1.7% per annum by March 2012, by which point it expects to have a portfolio in place offering at least said target.

By March 2014, it will then increase its returns target by 0.1% above PPF liabilities, continuing with its previously stated aim of self-sufficiency by 2030.

In its Strategic Plan 2011, the scheme states that increasing returns by 2014 will result in investments in new asset classes, as well as a larger pool of fund managers. This diversification will be matched by a "more proactive investment capability", it said.

PPF chief executive Alan Rubenstein added: "We have demonstrated our resilience during the recession, but economic recovery remains uncertain, and the public sector spending environment is challenging.

"While we remain confident about our sustainability, we expect our capacity to deliver to be tested during the next 12 months.

"But we are confident the PPF remains in a strong position to fulfil our mission of paying the right people the right amount at the right time, so we can continue to protect people's futures."

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