Defined contribution (DC) pension schemes must be re-jigged to ensure have more success than they did during the financial crisis, says Towers Watson.

Journey well, arrive better, a document released by the firm, looks at how employees were hit by investment risks and shows the many weaknesses that fiduciaries need to address in order to restore trust in DC.

"There is no doubt that being a member or a fiduciary of a DC plan is challenging, but more thinking is producing better practices," commented Gary Smith, senior investment consultant at Towers Watson. "Indeed many DC members now realise that they need to better address their own investment risk while plan fiduciaries are reviewing their investment strategies and default arrangements to redress the balance of risk and return. Against this backdrop, and with much greater awareness of an engagement with the issues, we are confident that a more robust DC proposition is emerging."

DC assets now account for 42 per cent of global pension assets, compared to 32 per cent in 1999.

"A really positive development of late is a strong move towards better understanding of the uniqueness of plan memberships, their objectives and likely behaviour patterns, particularly with respect to investment risk. This is important for grouping those that will simply follow a default process, those that with guidance are willing and able to make small personalised decisions and those that are able to manage their own choices. An analysis of a specific plan's membership, its demographics, its likely outcome requirements and its general tolerance to risk is vital when designing investment strategies, including the default, as well as when agreeing the member engagement option."

The publication looks at members' journeys to retirement and how they should be segmented according to their needs by evaluation lifecycle designs which alter their exposure to risk.

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