Workplace pension clients of Scottish Widows have £14m invested in the suspended Woodford Equity Income fund.
The money came from clients who chose to invest their pension contributions into the fund themselves as Scottish Widows offers its workplace pension clients a panel of funds alongside its default fund.
Ian McGowan, head of fund proposition at Scottish Widows said about 80 per cent of workplace pension clients choose to stick with the default option.
He added that to make the panel a fund must meet certain criteria, including the size of fund and track record of performance.
Mr McGowan said: "Something else we look at is, if anything has changed. So is the manager changing they way the invest? Or if a manager leaves his employment and goes to a rival firm, or sets up a new firm, will they be able to invest as they have before.
"In that situation we would do due diligence both on the manager and on the new firm."
Scottish Widows added the Woodford Equity Income fund to the panel in 2017.
The Woodford Equity Income fund was suspended on June 3, meaning clients are currently unable to withdraw their capital.
The suspension will run indefinitely as fund manager Neil Woodford sells hundreds of millions of pounds worth of assets to raise cash to meet redemption requests.
Mr Woodford has made some staff at his company redundant, following the loss of a range of investment management mandates, from firms such as St James’s Place and Omnis, as well as the Kent County Council Pension fund.
In addition, investors withdrew about £9m a day from the fund in May.
Paul Stocks, investment director at Dobson and Hodge in Doncaster, said: "The biggest mistake individuals make when buying funds is to buy high and sell low.
"When I hear private investors speaking, they are talking about what has done well, or what is doing well now. But they need to be talking about what will do well.
"Sometimes funds do well in certain market conditions, but wouldn’t repeat that in other conditions.
"Advisers tend to focus more on the long-term and on asset allocation than individuals do. I am doing a lot of reviews with clients now, and instead of focusing on a twelve month time horizon, I am focused on an 18 month time horizon."
In terms of the funds in the default option for workplace clients, Mr McGowan said that in 2017 they reduced the exposure to equities and increased exposure to more balanced funds.