Misys offers a range of 11 funds to members of its £120m pension scheme, available through Prudential’s platform.
These include index funds and an ethical fund from Legal & General, a corporate bond and a cash fund from M&G, and a property fund run by Threadneedle. With advice from consultants Watson Wyatt, the IT firm’s trustees also added Schroder’s diversified growth fund, a mixed asset fund, to the panel last October.
Members who do not select a fund are invested 50/50 in the L&G UK equity index fund and the World ex-UK index funds. Around 50% of the scheme’s 500 active members use the default fund, far below the typical default rate, which varies but is often 90% or more.
Andrew Brown, group pensions manager, attributes this to employees’ financial knowledge. “Our average employee knows a lot about the financial world, partly because we make [financial] software,” he says.
As employees approach retirement, they can choose to switch into the L&G Pre-Retirement fund over five, 10 or 15 years. If they don’t select one of these options, the 10-year time frame model will act as the default, moving the accumulated pot into the pre-retirement fund progressively, at a rate of 2.5% every quarter.
“The reason for lifestyling is to prepare people for retirement and the trustees’ viewpoint is that 10 years does that much more gradually than five years,” says Brown. IT is also a young industry and employees may not factor into their plans the prospect of early retirement.
The firm runs regular workshops to communicate with staff across its five sites.