Employer demand will drive pensions default pension fund development, said Chris Curry, director of the Pensions Policy Institute during an interview with Clare Bettelley, associate editor at Employee Benefits.
“As with most things, there’s a supply and demand side [to the market], so I think if employers are really keen, have the right governance structures, start to think carefully and start asking providers to provide default funds that are suitable for their employees, then the providers will have a vested interest in meeting those demands,” he said.
Curry added that providers need to take account of the changing profile of default fund members.
“Default funds really need to be changing over time to take account of the new types of [employees], the new demographic [that is] going to be saving in pensions going forward.
“They’re going to need to consider the types of people, the age profiles, the contribution levels that are going in, and really take account of all those features in order to develop [funds] to be fit for purpose for that particular group,” he said.
Curry was one of a panel that participated in Employee Benefits’ roundtable event, The future of default funds,which was held in December 2013 and sponsored by the Defined Contribution Investment Forum.
The roundtable debated a range of default fund issues in the context of pensions auto-enrolment, from the extent to which default funds are fit for purpose to how employers can communicate their default fund options to employees.
Read the digital edition of The future of default funds 2014.