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Defaqto publishes independent analysis of workplace pension schemes default funds

7 May 2018

Defaqto has published its workplace pension schemes default funds. The purpose of the guide, which is now in its second year, is to provide independent analysis of the workplace pension schemes available and their default funds, Defaqto said. 

All workplace pension providers known to the financial information group were asked to contribute to the study, resulting in what Defaqto has called one of the “most comprehensive assessments” of workplace pensions ever published.

The guide is split into two parts; key factors to consider when reviewing default funds and comparison of default fund facts.

The first section identifies scheme structures and variations, followed by the key factors to consider when undertaking due diligence and scheme selection for the accumulation phase.

The second part focuses on the comparison of default fund facts, providing impartial analysis and comparison of the default fund options available for workplace pensions across several different criteria, with the ultimate objective of empowering advisers to evidence “value for money.”

By February 2018, all businesses in the UK will have enrolled their employees into a workplace pension under auto-enrolment, resulting in a sharp increase in the number of workers enrolled in workplace pensions. The number of people in workplace pensions is now over the 10 million mark, compared to around 1 million in 2013. With around 9 out of 10 savers remaining in their pension default fund, Defaqto said its aim was to educate readers so they could confidently recommend a scheme based upon factual evidence.

Pan Andreas, head of insight for funds and DFM at Defaqto (pictured), said: “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 more subject areas, and arguable 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/

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