How to analyse workplace pension default funds

by Patrick Norwood, Richard Hulbert and Jason Baran
Insight Analysts

April 2018

This guide provides an independent analysis of the workplace pension schemes available and their default funds. The document highlights a great variety between default funds in terms of benchmarks utilised, manager structure, investment approach, level of diversification, attention paid to responsible investing, performance and costs, which advisers need to be aware of when making recommendations.

In February 2018, all existing businesses in the UK with one or more employees had to have established a workplace pension and auto-enrolled their employees into it.

With around 9 out of 10 savers remaining in their pension default fund, this guide helps educate advisers so they can confidently recommend a scheme based upon factual evidence.

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 guide is split 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 - 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

The document is accredited by the CII/PFS and CISI for up to 60 minutes of structured CPD.

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