As the defined contribution pension market grows and the defined benefit for most workers all but disappears, it is extremely important that employers and pension fund trustees rise to the challenge and look after their members.
With the old defined benefit pension it did not matter what contributions the employee made, (s)he was always guaranteed to get a known set income on retirement. All the risk was with the employer to keep the scheme properly funded.
But with the defined contribution the employer and employee both know what is going in but the pension that the employee gets at the end is totally at the behest of the markets and the fund manager employed to manage the pension pot.
This infographic by www.bakertilly.co.uk gives an indication of the challenges ahead as the old final salary pension (defined benefit or DB) continues to dwindle from 46% of pensions in 1997 to 28% in 2012 and still falling.
Click on image to enlarge to full size and scroll
In the UK people can expect to live longer and longer as healthcare improves throwing more pressure on those pension pots to deliver a meaningful pension for these now extended retirements.
It also goes into the requirements for auto-enrolment in an employer's pension scheme.
Original infographic here: http://www.bakertilly.co.uk/sectors/Pages/definedcontributionrisk.aspx
There are also six pension regulator's principles for good workplace DC pension scheme governance as well as seven tips to mitigate the risks concerned with defined contribution schemes.