Defaqto takes another deep dive into workplace pension default funds, comparing strategies and performance to help advisers identify ‘value for money’
25 April 2018
- Guide in its second year, with more default funds included in the analysis this year. Repeated due to popular demand.
- Provides independent analysis of the workplace pension schemes available and their default funds as used by 1m employers and over 10m employees
- The guide highlights a great variety between workplace pension default funds. This variety was in terms of benchmarks utilised, manager structure, investment approach, level of diversification, attention paid to responsible investing, performance and charging across the funds.
- No individual default fund outperforms its peers in every subject area considered
Today Defaqto, the independent financial information business, has announced that it has launched its 2018 guide to analysing default funds in conjunction with NEST.
All workplace pension providers known to Defaqto were asked to contribute to the study, resulting in one of the most comprehensive assessments of workplace pensions ever published.
The purpose of this guide is to provide independent analysis of the workplace pension schemes available and their default funds.
This is done by considering the key factors we feel advisers should understand, have an awareness of and be considering when reviewing the default funds on offer.
By February 2018, all businesses in the UK will have enrolled their employees into a workplace pension under auto-enrolment. This has led to a significant increase in the numbers of workers enrolled into workplace pension schemes. The number of people in workplace pensions now stands at over 10 million, which compares to approximately 1 million in 2013.
With around 9 out of 10 savers remaining in their pension default fund (99.7% in master trusts according to the Pension Policy Institute, October 2017), we want to help educate readers so they can confidently recommend a scheme based upon factual evidence.
We have split the guide into two parts:
1. Key factors to consider when reviewing default funds - We identify scheme structures and variations, then the key factors to consider when undertaking due diligence and scheme selection for the accumulation phase
2. Comparison of default fund facts - This is the technical area where we impartially analyse and compare the default fund options available for workplace pensions, across several different criteria, with the ultimate objective of empowering advisers to evidence ‘value for money’
Defaqto’s database currently reports on over 70 retail workplace pension solutions
Pan Andreas, Head of Insight for Funds and DFM at Defaqto, comments:
“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.
“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’.”
The full guide can be read at https://defaqto.com/advisers/publications/how-to-analyse-workplace-pension-default-funds/
Contact person for press enquiries:
Looking for more comments or data please contact us.
Katherine Blackler, Defaqto
Phone: 01844 295 457
Defaqto is an independent financial information business helping financial institutions, advisers and consumers make better informed decisions.
Our experts research, collect and continuously assess over 41,000 financial products, including General Insurance, Banking, Protection and Wealth sector and also for Funds and Fund Families, and rate them on a scale of 1 to 5 based on features and benefits that are relevant to consumers. These ratings are known as Star and Diamond Ratings.
They provide consumers and financial advisers with an unbiased and transparent assessment of the products and policies in the market from Defaqto experts.
Based on facts not opinions, Defaqto Ratings provide consumers with an expert benchmark so that they can see at a glance how products and policies compare.