Confidently recommend a workplace pension scheme
15 October 2019
Since auto-enrolment started in 2012, over 1.4 million employers have been required to set up saving schemes for over 10 million employees. With this growth in mind, Defaqto has produced a guide to reviewing workplace pension default funds.
This analysis has identified a number of key areas to consider when reviewing default funds, including governance and regulation, cost and investment and performance.
Factors tracked include the fund management structure and investment approach, asset classes available, performance, charges and the considerations given to ESG.
9 out of 10 savers remain in pension default fund
Having a comprehensive overview of funds allows you to confidently recommend a scheme based upon factual evidence, which is especially important when many workplace pension providers report that 9 out of 10 savers remain in their pension default fund.
The Competition and Markets Authority (CMA) underlines the role that advisers have to play in ensuring optimum retirement outcomes for people – having recently highlighted potential problems in the ways the investment consultant and fiduciary management markets worked. Their report identified that pensions schemes could benefit from more diverse and impartial advice.
Some providers and funds more competitive than others
“With some of these attributes, such as manager structure, investment approach and attitude to responsible investing, the choice of provider and fund might come down to the investment beliefs of the employer or their adviser. However, in terms of the other more objective features, such as risk-adjusted performance and charges, some providers and funds are clearly more competitive than others” says David Cartwright, Head of Insight and Consulting (Wealth and Protection).
“Bearing in mind the diversification in providers and clients, and their respective needs and objectives, it is not surprising that no individual default fund outperforms its peers in every subject area considered. That said, it is notable that some default funds consistently compare well to their peers across most subject areas, and arguably these represent the greatest opportunity for advisers to evidence ‘value for money’ and deliver good outcomes for clients” he adds.
Want to learn more?
For more details, and to compare the schemes for yourself, download our CPD accredited How to analyse workplace pension default funds document for free here.
To find out more about Defaqto workplace pension reviews, take a look here.
For more information about the pension market, download our free Pension service review 2019.
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