Mercer builds funds to improve DC members' pension outcomes

19.10_NordicMercer, the consultancy, has developed a range of white labelled funds with names reflecting their risk and return profile to improve pension outcomes for members of defined contribution pension schemes.

The new funds will be part of the newly launched workplace savings solution. Within the core funds, the consultancy offers both a range of growth funds and a range of innovative target retirement funds. The growth funds blend the firm’s best ideas across asset classes and managers, bringing in asset classes such as emerging market debt and commodities which are not traditionally used in defined contribution (DC) investment strategies.

Brian Henderson, European head of DC in Mercer’s Investment Consulting business and a member of the workplace savings development group, said: “When designing these funds we have focused on achieving the best possible outcome for members, given their contribution levels. For example, many young scheme members have no idea what they want from their pension when they retire so it’s important to offer funds and strategies that are more aligned to their decision-making.

“By breaking away from the traditional focus on individual asset classes we think it will be easier for members to understand and engage in the selection process, though there is also a default version for those who feel they are unable to participate in this process.”

Mercer’s design is built around three groups of members: ”Do it for me”, ”help me do it” and ”leave me to it”. The first group will be offered the default arrangement, while the second group can select from a range of Mercer pre-built funds. The ”leave me to it” group will have complete freedom to build what they want from a list of 88 Mercer top-rated funds as well as the blended funds.

Mercer governance is central to the investment offering. All the funds on offer will rely on the firm's global manager research group, and have been identified as having a high probability of outperforming their benchmark. In addition, underlying asset classes in the pre–built funds will be subject to Mercer’s asset class assumptions and will be adjusted should these change.

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