Personal Pension  

Third of pension managers still make annuities the default

Third of pension managers still make annuities the default

A total of 8 per cent of pension managers and trustees are targeting drawdown as their default investment strategy, according to research by LifeSight, Willis Towers Watson’s UK defined contribution master trust.

The poll of 99 UK-based pension managers and pension fund trustees found 35 per cent still target annuities as the primary focus of their investment strategy even though 53 per cent feel members needs have dramatically changed as a result of the pension freedoms.

Fiona Matthews, managing director of LifeSight, said: “Going forward, as master trusts become more prevalent, the onus will be on pension providers to use personalised and interactive communications to engage members in their pension, and provide readily accessible support that members desperately need.”

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The research also revealed pension schemes plan to move towards a more strategic model, by prioritising their activity on monitoring members’ behaviour and helping them at retirement.

Over two-thirds - 68 per cent - would like to prioritise helping members at retirement in the future, but currently only 17 per cent are able to manage it.

A third - 31 per cent - would like to spend more time monitoring member behaviour in the future but only a handful - 3 per cent - do so now.

Daren O’Brien, director at Aurora Financial Solutions, said: “I do believe that the outcomes for members have greatly improved and has allowed for far greater options, choice and the ability to better manage their own pensions.

“The wider options for members are only a benefit if they are used and the report seems to suggest they either aren’t being fully utilised or understood yet.

“Unfortunately this enhanced flexibility comes with additional complexity, costs and compliance for the schemes themselves, which invariably will be passed on and charged to the members.”