Almost two-thirds of pension scheme trustees have chosen "default" investment funds which have an inappropriate mix of assets for the members, a major survey of defined contribution schemes has revealed.
The survey by Irish Life looked at the default options chosen by more than 2,000 schemes and group pension plans.
When members of a defined contribution scheme do not choose a specific investment fund for their money, it is directed into a so-called "default fund" chosen by the trustees.
According to Irish Life, in many cases more than 80pc of members of a pension scheme will be invested in the default investment and they do not have either the knowledge or interest to choose a fund.
But often the default investment fund may have been chosen years ago and its asset allocation hasn't been revised to reflect the changing age profile of members of the pension schemes and recent dramatic changes in markets, meaning that the money is being invested in excessively risky funds.
"It is the generally held view that as members of a scheme grow older and near their retirement age, the assets of the fund should be switched into more secure and less volatile assets such as bonds or cash," David Harney, chief executive of Irish Life Corporate Business, said.
"But our research shows that many members of DC schemes (defined contribution) -- some 62pc of those surveyed -- are invested in default investment funds which have too high a proportion of their assets invested in more volatile assets such as equities and alternative investments."
Irish Life Corporate Business has begun an information campaign to educate trustees on this matter.
"In the days of Defined Benefit schemes, it didn't matter to the employee how his/her pension fund was performing because they were guaranteed a certain benefit. But with DC schemes, you're guaranteed nothing and you have to take responsibility for the options chosen," Mr Harney said.