Information to Members of Dc Pension Plans: Conceptual Framework and International Trends

Abstract

In recent years, the shift towards defined contribution (DC) pension plans has been a key trend in the field of private pension provision. In this context, where a wide range of options may potentially be available to individual plan members, it is crucial to ensure that they have the information necessary to make appropriate choices. Based on the findings of an IOPS survey, this paper offers a conceptual framework for considering information provision within the context of the pension system and related factors (such as the range of choices offered to individuals, the use of default options, the level of financial literacy, etc). It goes on describing the different general approaches followed across countries regarding the information to be given to members and the role played by the supervisory authority in this context. After a classification of the information documents used, a detailed description of the evidence collected follows, focusing on specific contents of the information directed to members: pension projections, investments and returns, costs, contributions paid. Finally, the paper identifies common wisdom and good practices, stressing the complementary relationship between information and financial education and the importance of (and information signals provided by) default options. The conclusions indicate aspects of the matter that deserve further work.