Don’t let the Default be the Default

16 Feb 2022

Most members of a Workplace Pension will rely on other people, normally their employer and possibly trustees to make important decisions around their workplace pension and specifically around the fund where their contributions are invested, namely the Default Fund.

Despite the best efforts of an employer to promote the benefits to a member to review their investment within their Workplace pension to ensure it matches their personal attitude to risk, many members do not choose to do so. There is no obvious reason why this is not done but I’m sure that if the value held in a member’s pension was available in their personal bank account, they are likely to keep a much closer eye on what the value is and how the money is invested. Let’s not beat around the bush, pension engagement is tough!

Don’t get me wrong, this blog is not going to unlock the key to how top level pension engagement looks as there are different horses for different courses based on a members age, investment knowledge, retirement plans and personal attitude to risk however this article will highlight the importance. The most important message here is to get people to engage.

The thing with default funds is that they are designed to meet the needs of most of the membership however there will always be people for who the default fund just doesn’t work. There could be people within a pension who want to take higher risk, some that want a more cautious approach as well as some people who perhaps strong environmental views or perhaps religious ones too.

The general rule of thumb has always been to take more risk as a younger person and then decrease this risk as you get closer to you pension access/retirement age and there is nothing wrong with this approach. However do members of a workplace pension know that this is happening and do they no that they have a choice not to follow the default. Unlikely I suspect.

Whenever I engage with a member of a Workplace pension I tend to suggest 2-3 bite sized takeaway things for them to action which could be, review your risk (using Wingate’s services), register online to get visibility around your pension and get a state pension forecast. When I meet them next year, we’ll move it forward a little and talk about other pensions assets, working on projection work and looking at a target pension access age. This tactic seems to work as however important it may be to review their pensions; people don’t always do it until its too late and therefore getting people engaged in pensions and understanding how important they are is of paramount importance. As I always tend to say at the end of a call/meeting, ‘Your older you will thank the younger you for the steps you take today.’, and I hope that this resonates with most of you who are reading this article.

Wingate Benefits Solutions have a vast array of knowledge and experience within their dedicated team as well as various tools be them off or online to help promote the importance of pension members to  engage with their pension and if this is something you are looking discuss, please do not hesitate to contact a member of the team at info@wingatebs.com or on 01883 332260.

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