The changing shape of the DC auto-enrolment market 2014 to 2020

03 February 2014

The Pensions Institute report looks to assesses value for money in defined contribution default funds.

The report states that the most important feature of automatic enrolment schemes is the default fund, which is the multi-asset investment strategy designed for the majority of members who do not wish to make investment decisions. Total contributions, member charges, together with the fund’s full costs, the asset allocation, and the glide path (the changing asset allocation over the period of membership) are key determinants of the level of the pension income in retirement that is secured by the fund at the decumulation stage, which, at present, usually involves the purchase of a lifetime annuity.

In this new report the Pensions Institute asks whether the cost of membership offers value for money to the ‘average’ member, by which they mean the 90-97% of employees who will be automatically enrolled into the default fund.

Never before has it been more important for the pension industry to focus on VfM (Value for Money) as thousands of employers struggle to comply with their legal, and no longer optional, workplace pension obligations.

Read the Institute’s full report: Assessing value for money in defined contribution default funds. Their former report Caveat Venditor considered whether the brave new world of auto-enrolment should be governed by the principle of seller not buyer beware?