BSkyB broadens investments for DC pension default fund

BSkyB has redesigned the default fund for its trust-based defined contribution (DC) pension after an extensive review of the scheme concluded the existing fund was based too heavily in equities.

The broadcaster has replaced its default lifestyle fund, used by more than 90% of employees, with one that is based on diversified asset classes and is exposed to a greater range of global markets.

Half of the new default option – communicated to staff in September – is based in equities and is managed by BlackRock, while the other half operates as a diversified growth fund and is managed by Schroders. Instead of being solely invested in developing markets such as the UK and the US, the equities element also involves emerging markets such as China.

Dev Raval, head of reward at BSkyB, said: “Developing markets have a different level of growth compared to the developed markets. The previous fund did not have any exposure to places like China, Brazil and India.”

The review of BSkyB’s pension scheme, which began last autumn, was triggered by the financial crisis. “Last year the business conducted a more fundamental review [than usual],” said Raval. “We were trying to look at the impact of what had gone on in the world markets after the financial crisis. We wanted to see what lessons could be learnt and reflect those back on our pension fund.”

The changes to BSkyB’s default fund have been followed up with an extensive communications campaign encouraging staff to reassess their investment choices.

Raval added: “We have had an investment plan change, but we are using it as an opportunity to make people in the lifestyle [default option] aware they have made a choice. It is the default option, but employees are still making a choice. We want them to be aware of it.”

Staff can find out what kind of investor they are by filling out a questionnaire on BSkyB’s pensions website. Letters about the new default option have been sent to active and deferred members, and face-to-face sessions with HR staff and trustees have been organised.

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