PensionDCisions and FTSE launch DC index series

PensionDCisions and FTSE Group have teamed up to create an objective benchmark for the UK’s defined contribution pensions market.

The FTSE PensionDCisions DC index series is designed to reflect the asset allocation decisions made by DC plans in their default strategies and the subsequent return and risk these deliver to consumers.

The indices reflect various points in the lifecycle of a DC scheme, comprising the growth phase, de-risking and at retirement.

The series includes saving for retirement - Growth index; approaching retirement - De-risking index consisting of three target-dated indices; and point of retirement - At-retirement index.

FTSE says these indices will allow DC plans to benefit from a multi-asset class benchmark which can be incorporated in the construction, selection and monitoring of DC default solutions.

Group managing director, Europe, Tony Raw says: "The launch of these indices comes at an exciting time for FTSE, as it rapidly evolves its index offering and brings an all important transparency to the DC market."

PensionDCisions managing director Graham Mannion adds: "This [the index] provides an independent, objective reference point to help sponsors, trustees and advisers calibrate their decisions regarding asset allocation."

The Pensions Regulator and National Association of Pensions Funds both welcomed the launch.

The Pensions Regulator strategic development executive director Bill Galvin says: "Improving transparency of these outcomes in DC schemes is a challenge the industry must meet, and we very much welcome any initiatives which work towards that goal."

NAPF director of policy Nigel Peaple says: "Getting DC default fund design right is one of the key challenges facing DC schemes. The index should help trustees, sponsors and providers develop their thinking on this difficult subject."