Published online by Cambridge University Press: 05 July 2011
DC pensions are guided consumer products
Effective investment governance in defined contribution (DC) schemes needs to start with a clear understanding of the members’ role and responsibilities within the investment process.
When DC pension plans were first introduced, there may have been an expectation (or at least a hope) that employees would act as the rational consumers of classical economic theory, making optimal saving and investment decisions in accordance with their personal preferences, and thereby doing effectively everything that the professionals had previously done for them in defined benefit (DB) pension schemes.
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