Pensions - Articles - Employers lack the knowledge to make decisions about AE

 Of the 248 advisers who responded to the survey, just one in five (19%) say that fund choice had been of importance to the client in the schemes they had written so far. And despite the fact that most people will go into the default fund, advisers don’t see the quality of the default fund as a high priority with just 16% stating that it’s the most important consideration when selecting an appropriate scheme for auto enrolment.

 Of the auto enrolment schemes that advisers have written so far, guaranteed acceptance was the most important factor for advisers cited by 30%, closely followed by the level of charges cited by 29%.

 Morten Nilsson, CEO, NOW: Pensions said: “The vast majority of small and micro employers will have absolutely no experience of pensions and will be facing auto enrolment with a mixture of horror and dread.

 “The advisory community has an essential role to play, guiding employers through the process and helping to ensure that the schemes they select for their employees are fit for purpose.

 “We know that over 99% of auto enrolment members are finding themselves in the scheme default fund so it’s imperative that advisers interrogate the appropriateness of these funds. It’s a mistake to think that all default funds are the same as they have very different risk and return profiles.

 “Poorly performing default funds with out of date lifestyle strategies can seriously damage savers’ retirement incomes and their significance shouldn’t be underestimated.”