Workplace Defaults: Better Member Outcomes

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Switching from a pension default fund could cost ‘DIY’ investors up to £247,000

New research from The People’s Pension and State Street Global Investors shows that DIY investors risk missing out on up to £247,000 by switching from their workplace pension scheme’s default investment strategy and making their own fund choices instead.

Our new report, Workplace Defaults: Better Member Outcomes has revealed the potential cost of four of the most common mistakes made by pension savers who choose to be their own investment manager rather than investing in a default fund.

Workplace defaults report cover
Workplace Defaults: Better Member Outcomes report

 

It shows how different savers, who display particular behavioural biases, perform over four decades, compared to someone who stays invested in a well-run default fund throughout.

  • Cautious Connor – doesn’t like taking risks so invests in a cash fund
  • Performance chasing Patricia – buys high into a strongly performing fund
  • Eggs in one basket Elliot – fails to diversify his portfolio
  • Forgetful Fiona – is initially an active investor but fails to keep her portfolio under review

The report also focuses on the lack of knowledge around charges paid on pension pots, with almost 8 in 10 (78 per cent) savers unaware that a fee is taken from their pot*.

*Source: The FCA Financial Lives Survey found that 78 per cent of defined contribution savers were not aware of charges on their pension. 


Workplace Defaults: Better Member Outcomes

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