Personal Pension  

Aviva tops ShareAction’s first AE report

Aviva tops ShareAction’s first AE report

ShareAction has published an inaugural report ranking the UK’s top auto-enrolment workplace pension providers, with Aviva taking the top spot.

‘Reclaiming Ownership’ covers nine pension providers with £1.9trn in assets under management, which the report said represents almost two thirds of the £3trn life insurance companies and pension funds in the market.

Providers’ auto-enrolment funds were ranked on three criteria: transparency, governance and responsible investment performance.

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Each provider had a possible total score of 80, but Aviva managed to secure the top spot with a score of just 39, less than half full marks.

ShareAction’s rating of auto-enrolment workplace pension providers in 2016

Pension provider Score out of 80
Aviva39
Standard Life (contract-based scheme)37
Standard Life (master-trust)36
Aegon32
Nest 27
Legal & General (master-trust)23
Legal and Genera; (contract-based schemes)23
Now: Pensions17
Royal London16
Scottish Widows13
The People’s Pension4

Source: ShareAction

Under the government’s auto-enrolment scheme, aimed at getting more people to save towards retirement, employers must enrol staff earning more than £10,000 a year into a pension scheme.

Across 2016, half a million small employers must select a provider for their staff according to the Pensions Regulator.

The government has estimated that by 2018, the number of UK pension savers in an auto-enrolment scheme will have grown by 9 million.

As a result, ShareAction’s researchers believe the providers surveyed for this research will dominate the UK’s private pensions market for decades to come.

Part of the research from the survey found not one of the auto-enrolment pension providers in the group has chosen to put a pension saver with assets in the scheme on its board.

Additionally, a number of these giant providers are delegating virtually all responsibility for the prudent stewardship of pension savings to asset managers, rather than developing and communicating their own investment policies to protect members’ savings, the report said.

Since most of the schemes do not disclose investment policies to customers on their customer-facing websites, this makes it unclear how, or if, these pension providers scrutinise their asset managers and hold them to account on behalf of savers.

The research also revealed that only five of the providers require evidence of stewardship capabilities when selecting external asset managers.

Furthermore, only two of the providers surveyed, Nest and Aviva, have issued statements of compliance with the UK Stewardship Code as asset owners.

Nest achieved the best score on governance. ShareAction commended it for having a section on responsible investment on its customer facing website.

There is wide variation on how the schemes are integrating social, environmental and governance risks into their investment strategies, the report suggested.

ShareAction stated in its overview of the survey: “Many of the providers do little or nothing to find out which investment issues their pension savers care most about. Only Standard Life surveys members of its default auto-enrolment fund on their views on investments.

“None of the providers give information in their annual statements to members about what they are doing to invest their savings responsibly with regard to environmental and social issues.”