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  • FIRST POST
    • Bean Counter
    • By Bean Counter 21st Sep 19, 8:20 AM
    • 1,475Posts
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    Bean Counter
    Employer - choice of pension funds for employees
    • #1
    • 21st Sep 19, 8:20 AM
    Employer - choice of pension funds for employees 21st Sep 19 at 8:20 AM
    Hi,

    I wanted to undertake a review of where we invest our employees pension contributions to see if they are getting the best return. We currently have two schemes, both stakeholder pensions. The first is The Peoples Pension with B&CE and the second is with Aviva, where the funds seem to be invested in their Future Focus 2 Drawdown Investment.

    How can I be sure that they are good funds and should not be with someone else?

    Thanks in advance.
    Today is the first day of the rest of your life
Page 1
    • Marcon
    • By Marcon 21st Sep 19, 9:26 AM
    • 1,263 Posts
    • 998 Thanks
    Marcon
    • #2
    • 21st Sep 19, 9:26 AM
    • #2
    • 21st Sep 19, 9:26 AM
    If you want to undertake a review, the way to do so is via someone who is authorised to give advice in this area.

    The Peoples Pension isn't a stakeholder, by the way.

    You say you want to see if your employees are getting the best return, which is an entirely laudable sentiment. The return will depend on where they choose to invest their funds in whatever scheme(s) you offer to them - and the reality is that most of them are likely to stay in the default fund and won't be remotely grateful to you for your efforts! Perhaps the starting point would be to find out from the providers where the members' funds are invested (they should be able to give you the % in the default fund - no breach of privacy or data issues there) and you can then see how 'interested' employees might be in getting involved with their own financial futures.

    You might also find out where the funds are with Aviva - not sure what you mean by 'seem'. Perhaps something to check?

    Increasing the range of funds offered to members might be easier than changing provider.
    • Bean Counter
    • By Bean Counter 22nd Sep 19, 7:04 AM
    • 1,475 Posts
    • 937 Thanks
    Bean Counter
    • #3
    • 22nd Sep 19, 7:04 AM
    • #3
    • 22nd Sep 19, 7:04 AM
    If you want to undertake a review, the way to do so is via someone who is authorised to give advice in this area.

    The Peoples Pension isn't a stakeholder, by the way.

    You say you want to see if your employees are getting the best return, which is an entirely laudable sentiment. The return will depend on where they choose to invest their funds in whatever scheme(s) you offer to them - and the reality is that most of them are likely to stay in the default fund and won't be remotely grateful to you for your efforts! Perhaps the starting point would be to find out from the providers where the members' funds are invested (they should be able to give you the % in the default fund - no breach of privacy or data issues there) and you can then see how 'interested' employees might be in getting involved with their own financial futures.

    You might also find out where the funds are with Aviva - not sure what you mean by 'seem'. Perhaps something to check?

    Increasing the range of funds offered to members might be easier than changing provider.
    Originally posted by Marcon
    Thank you for the reply. The Aviva funds are held in the default funds, based on age profiles. How confident can I be and how can I review that the fund managers are doing a good job of investing our money without going to the expenses of seeking an IFA to do a review or would the potential increase in fund performance from following any IFA recommendations more than outweigh the cost?
    Today is the first day of the rest of your life
    • Dox
    • By Dox 22nd Sep 19, 11:39 AM
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    Dox
    • #4
    • 22nd Sep 19, 11:39 AM
    • #4
    • 22nd Sep 19, 11:39 AM
    The Aviva funds are held in the default funds, based on age profiles. How confident can I be and how can I review that the fund managers are doing a good job of investing our money without going to the expenses of seeking an IFA to do a review or would the potential increase in fund performance from following any IFA recommendations more than outweigh the cost?
    Originally posted by Bean Counter
    If you are not authorised to give investment advice, the path you propose is perilously close to doing so.

    If all your employees are in the default fund, how many have expressed concern and said they are worried about performance? Why not give them a choice of funds and see how many take any interest at all?

    In terms of whether the fund managers are doing a good job, look at the fund factsheets (they'll be on Aviva's website) and see how they compare with other funds. If you aren't sure of your ability to do this, come back here and post the exact funds you wish to assess and there should be someone (or several someones) who can comment helpfully.

    You can't reclaim the IFA's review costs from improved fund performance, so unless you are the business owner and you are talking about (primarily) your own pension, the two things are unrelated.

    One thing you can do for yourself is look at the charges and then do some googling (or ask here) to see how they compare with other providers.
    Last edited by Dox; 22-09-2019 at 11:42 AM.
    • AnotherJoe
    • By AnotherJoe 22nd Sep 19, 7:00 PM
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    AnotherJoe
    • #5
    • 22nd Sep 19, 7:00 PM
    • #5
    • 22nd Sep 19, 7:00 PM
    The Aviva funds are held in the default funds, based on age profiles
    If this is life styling it's going out of favour now. My company introduced it in early 2000's and started to withdraw it from around 2015 or so.
    I think the best thing you can do is provide a wide range of funds and let employees choose. Noting that most will stay in whatever the default fund is.
    • SonOf
    • By SonOf 23rd Sep 19, 9:02 AM
    • 1,444 Posts
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    SonOf
    • #6
    • 23rd Sep 19, 9:02 AM
    • #6
    • 23rd Sep 19, 9:02 AM
    There are different variations on lifestyling nowadays. You tend to find some are based on annuity purchase, others based on drawdown where the tax free cash is taken up front but for many people, they should not be in lifestyling at all (as the fund will remain invested for another 20-30 years after retirement)

    I wanted to undertake a review of where we invest our employees pension contributions to see if they are getting the best return.
    That is a regulated activity and you should not be involving yourself in this unless it is on an information-only basis. ....

    How can I be sure that they are good funds and should not be with someone else?
    .....and if you are unable to tell then you should not be going near it.

    Default funds tend to be middle of the road funds. Funds that you cannot really make a mistake by being on. Rarely the best, rarely the worst in terms of performance but frequently the best in terms of suitability.
    • Bean Counter
    • By Bean Counter 23rd Sep 19, 11:07 AM
    • 1,475 Posts
    • 937 Thanks
    Bean Counter
    • #7
    • 23rd Sep 19, 11:07 AM
    • #7
    • 23rd Sep 19, 11:07 AM
    Thanks for the advice which I will follow. I'll have a look at the fund performance and review but purely for my own pension fund, and may well just leave as is for now.
    Today is the first day of the rest of your life
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