How to analyse auto-enrolment default funds
16 November 2016
Defaqto, the financial information business, today releases insightful research that shows that the most commonly used default funds for auto-enrolment pensions vary greatly.
The most commonly used default funds vary in terms of benchmark, manager structure (in-house manager, third-party managers or a mix), investment approach (active, passive or both), level of diversification, performance and charging across the main auto-enrolment default funds available. Evidencing ‘value for money’, not necessarily in terms of the cheapest or best performing fund, through an assessment that includes all of these elements will ultimately create a good outcome for the client.
With 9 out of 10 savers remaining within the default pension fund throughout their retirement saving lifetime, it is vital that advisers recommend the right auto-enrolment scheme for their clients.
Patrick Norwood, Insight Analyst for Funds at Defaqto, comments:
“With some of these attributes, such as manager structure and investment approach, the choice of provider and fund might come down to the investment beliefs of the employer or their adviser. In terms of the other more objective features, namely risk-adjusted performance and charges, some providers and funds are clearly more competitive than others.”
Richard Hulbert, Insight Analyst for Wealth at Defaqto, adds:
“Auto-enrolment default funds will affect the retirement standard of living for millions of us. This is the first time many of these funds have been publicly scrutinised and compared and the findings are really quite revealing. As a result of this study I hope that more auto-enrolment schemes will be recommended based on impartial analysis and facts that evidence ‘value for money’, enabling savers to enjoy a better standard of living in retirement”.
Defaqto’s CPD accredited How to analyse auto-enrolment default funds highlights the factors advisers need to consider and understand when reviewing a default fund for their clients.
Defaqto is a financial information business, helping financial institutions and consumers make better informed decisions.
Our independent fund and product information helps banks, insurers and fund managers with designing and promoting their propositions. We analyse more than 30,000 financial products in the UK. These products change on a daily basis, and our customers need help with keeping track of this.
We have been doing this for over 20 years, and we have 60 analysts spending 400 hours a day monitoring the market. They ensure that the information we provide is accurate and up to date. Our experts have done all the hard work so that financial institutions and consumers can make better informed decisions.
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