Workplace Pensions - why are some so 'bad' and others not 'bad at all'?

Bostonerimus1

Whether a pension is Defined Benefit or Defined Contribution is a basic difference. For DC pensions the fees and how you invest your money make a big difference as well as services like ease of drawdown and prompt replies to enquiries. The biggest way UK pension outcomes could be improved would be investor education and engagement.

B0bbyEwing

QrizB said:

From reading Now's guidebook, it seems that they start to de-risk your investments 15 years before you retire.

If you've told them that you plan to retire at 67, they'll be de-risking from age 52.

Can you give them a later retirement age to delay their automatic de-risking?

The other option is to make a partial transfer out to another place, eg. your SIPP, where you can get more options. Do Now allow partial transfers?

Yeah I'm aware of that (don't mean that in a snotty sense btw, just letting you know I'm aware of the de-risking thing) - but that's the thing, I don't recall ever being asked when I plan to retire. Maybe I have been asked & I just can't remember it. Either way, I've always answered the question with 65 & I'm 25 years off that yet. So I shouldn't be getting de-risked just yet.

Interesting on the partial transfers. I don't have the answer to your question, I'd have to ask them. Never thought of it. I just assumed it'd be locked in.

EthicsGradient said:

I can't say I'm impressed with Now's explanation of what they invest in:

This fund is designed to provide stable growth for your pension savings over the long term. To achieve this it spreads money across five investment areas that tend to perform differently in different economic conditions.

This approach is known as diversification. It helps to achieve growth without too much volatility (ups and downs in value). The five areas are:

• equities (shares)
• interest rates
• inflation
• income
• other investments.

Oh, so they invest in the area called "interest rates", do they? They also invest in "inflation". They invest in the area called "income". And in the oh-so-usefully-named "other investments". Great. Super.

I have found this, from 2018, via Wikipedia:

Now: Pensions, the third-biggest master trust in the UK, has been put up for sale following a catalogue of administration problems that has led to the provider exiting the regulator’s approved provider list and a fine for its trustees.

Sources close to Corporate Adviser say the provider, which has been beset with administration problems since launch and whose default has suffered several years of poor performance, has been offered for sale to a number of parties over the last few months. However, at least one provider has rejected the £560m scheme because of ongoing concerns over its administration.

Now: Pensions put up for sale - Corporate Adviser (corporate-adviser.com)

Exactly!

They just don't seem very 'good' or informative.

I suggested to my employers that they look to change providers & gave various bits of info to other providers & how I think any of them would be more beneficial than Now. I said how I would like to have some choice as to what MY money is invested in. Even Nest & TPP give you 3 choices of cautious/balanced/risky (ok the term isn't "risky" but you get me).

All I got in return was to tell them (Now) I want to extend my retirement date.

Err, no thanks. Doesn't really address the point I raised.

I think that because the box of must supply a WPP provider has been ticked then that's it job done as far as my employer is concerned. I suspect that probably the majority of companies do that to be honest. Not particularly bothered who they choose, just any will do so long as it ticks the box of supplying one. I suspect the considerable minority will actually spend time looking in to what looks better than what.

It's free money (from my employer) so I'll stick with it but I'll continue putting in the minimum & anything above & beyond this will continue to be split between my SIPP & LISA.

Albermarle

NOW is unusual as it only offers one choice of investment, which appears to be not performing very well.
On the other hand, although other workplace pensions offer a range of funds, the vast majority of clients do not make any choice, and end up in the default fund anyway. So just offering one fund is not really a disadvantage for most.
However for a fund containing around 55% equity, the performance is not so out of line, with say Vanguard Life strategy 60. The NOW fund has performed better than VLS 60 over 3 years and worse over 5 years.
Normally in the long run funds containing a higher % of equity will grow more, although the increased volatility can scare some people.