Auto Enrolment 'Default' Pension Funds
Since 2012 more than eight million employees have been put into pension funds picked by their employers. Under “automatic enrolment” rules firms must save into a pension on behalf of staff. It is thought about 90pc of staff make no investment choice, however, meaning their money goes into a “default” fund selected by their employer or their advisers. As a result, billions worth of lifetime savings are entrusted to pension firms to invest and oversee with varying levels of success.
On average the default funds returned 10.2pc annually which is higher than savers would earn on cash but 3.7 percentage points lower than the average globally invested funds.
Employees should be encouraged to review the fund they have automatically been invested in.