Worst workplace pensions can lose savers £370,000


Those thrift up for retirement through their employers’ auto-enrolment schemes can see investments modify by nearly £400,000, depending which fund the money is in.

The disparity in the annual conducts of the UK’s top ten Defined Contribution default funds has been highlighted by new research.

Fault funds are ones that employers select for savers who do not make spry choices themselves.

Their performances range from 6.3 per cent to all but double that at 12.5 per cent, according to the research by JLT Employee Allowances.


Workers are missing out due to poorly performing workplace pensions

The gap in the annual performances of the UK’s top ten Defined Contribution default funds has been highlighted

The change is so huge that by the age of 55 some savers could be £370,109 worse off than others.

That is far in surfeit of the £226,185 value of the average UK home stated by the Land Registry final July.

According to The Pensions Regulator, 92 per cent of all defined contribution golden handshake cause to retire savers are invested in default strategies chosen by employers on their behalf.

People can whip funds but most do not, either trusting the employer has made the best purpose for them or because they are not interested or informed enough to choose for themselves. 

Experts warned employers have a responsibility to find the best investment master plan for their pension schemes – but many do not want to pay for specialist advice.

Maria Nazarova-Doyle, the grey matter of DC investment consulting at JLT Employee Benefits, said: “Auto-enrolment default savings are not as plain vanilla as one may think.

“The disparity in their strategies and risk-return also netts could lead to a huge shortfall, amounting to the equivalent of a property.”

One reckoning shows the difference for a worker in their early 20s, earning £22,000 and making the nadir contribution of two per cent matched by the employer. 


If money is invested in best-performing green, workers could expect pension pot of £525k at 55

If the money was invested in the best-performing support, the worker could expect a pension pot at 55 of £525,586.

If the cash was put into the least utilitarian fund the pot would be just £155,477.

Keith Richards of the Personal Finance Friendship said: “It’s understandable staff trust their employers but it is always first to get independent financial advice yourself.”

Mark Abley from The Superannuation Review Service added: “A good independent financial advisor should be superior to quickly provide guidance.”

The Department for Work and Pensions said: “We go on to work with the Pensions Regulator to ensure employers are aware of all the selections available to them.”

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