Press Releases

UK, January 17, 2007 - The use of third party administrators for defined contribution (DC) pension schemes is likely to become more popular over the coming years as employers and trustees have more to gain from unbundling their plans, according to consultants Watson Wyatt.

Some 56 per cent of the trust-based DC pension schemes run by Britain's largest companies currently use a third party administrator, according to the firm's recent FTSE 100 Defined Contribution Pension Scheme Survey. While 25 per cent favour in-house administration, some 19 per cent are currently administered by an insurance company or investment manager on a bundled basis.

"Many DC schemes, set up with no assets and no members, chose a bundled approach because it was the most pragmatic solution," said Gary Smith, a senior consultant at Watson Wyatt. "As these DC schemes now grow in size and importance, more will have sufficiently high numbers of members, cash flow and assets under management to make third party administration a more cost effective and efficient option. We have also seen a trend, particularly among larger employers, for opting for trust-based rather than contract-based schemes run by insurers. As schemes continue grow in size and receive greater management focus, unbundling - whereby the employer or trustees choose a 'best of breed' service provider for the various elements, such as administration, investment management and communication - may become increasingly attractive and cost-effective."

For further information contact:

Gary Smith
Senior Strategy Consultant
+44 (0) 20 7227 2460
gary.smith@watsonwyatt.com

Bruce Wraight
Head of Public Relations
+44 (0) 1737 273370
+44 (0) 7771 765154
bruce.wraight@watsonwyatt.com

Visit Watson Wyatt's online press office: www.watsonwyatt.com/europe/news/journalists.

Watson Wyatt Worldwide
Watson Wyatt (NYSE: WW) is the trusted business partner to the world's leading organisations on people and financial issues. The firm’s global services include: managing the cost and effectiveness of employee benefit programmes; developing attraction, retention and reward strategies; advising pension plan sponsors and other institutions on optimal investment strategies; providing strategic and financial advice to insurance and financial services companies; and delivering related technology, outsourcing and data services. Watson Wyatt has 6,000 associates in 30 countries and is located on the web at www.watsonwyatt.com.