Three more providers have told FTAdviser they are reviewing the default investment option on the auto-enrolment pension schemes following the changes announced at last week’s Budget.
The Peoples Pension, Now: Pensions and Aegon have all confirmed they are reviewing the de-risking ‘lifestyle’ progression, taking to five the total number of providers assessing the affect of the reforms on their occupational pensions.
Earlier today Scottish Widows followed government-backed Nest in confirming their scheme was under review.
Standard Life and Legal & General said they are not reviewing their strategies, with the former stating that it is not necessary as it has more than one default fund in place. Aviva stated it is still reviewing all areas connected to the Budget changes.
Darren Philp, head of policy at The People’s Pension, said the firm would be looking to see if the governance remained “fit for purpose”, adding that all providers will have to review the options on their default funds.
Mr Philp said: “We had the announcement last week, the government will be consulting on this and as part of that governance we will see if there are opportunities for us.
“We will see if the default is fit for purpose. What the announcement does is provide a much more flexible machine for auto-enrolment providers to provider schemes for members’ best interests.
“I think everyone will have to review their default investment trusts.”
Morten Nilsson, chief executive of Now: Pensions, added that lifestyle funds assume that savers are on a journey that typically ends with an annuity purchase. He said the Budget reforms mean that people will look at other ‘at retirement’ options and this must be reflected in the “design” of auto-enrolment pension strategies.
Mr Nilsson said: “The chancellor’s reforms may result in an alteration of destination for the majority of members, and such an alteration will need to be taken into account in the design of future lifestyle strategies.
“As you would expect, we are reviewing the structure of our funds to ensure that they are suitable in this new environment.”
Nick Dixon, investment director at Aegon UK, added: “The Budget fundamentally changes the savings landscape, especially pensions, with the Chancellor demolishing savings barriers. With annuities no longer the default income option in future, different financial planning and asset allocation choices become critical.
“Aegon is therefore reviewing default investment options, including lifestyling, and we aim to conclude this review mid-year 2014.”