Question: I’ve been saving regularly for the past decade or so in my workplace pension. I haven’t really got any knowledge of investments, so I’ve just kept my money in the “default” fund, which has performed quite nicely despite the chaos which seems to engulf the globe every couple of years. However, I’ve been reading about these so-called “Mansion House” reforms and I’m worried my pension might be about the get riskier. Is there anything I can do?
This is an investment vehicle designed to meet the broad goals of the entire scheme’s membership and as such will not be tailored to your personal goals or risk preferences. Each auto-enrolment default fund will take a slightly different investment approach, but all have to meet certain government-mandated standards, including complying with a 0.75 per cent charge cap.
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If you haven’t already, it’s worth checking to see if there are alternatives available from your provider that might better meet your preferences.
In 2025/26, the minimum earnings contributions are based on are between £6,240 and £50,270, although many companies offer more generous terms than this. To be eligible for automatic enrolment, you need to be aged between 22 and state pension age (currently age 66) and earning at least £10,000 a year, although those outside these parameters have the right to opt in if they choose.
As you note in your question, the Government is very focused on driving more pension money into “productive” UK assets such as private equity vehicles, with the aim of boosting investment in the economy and ultimately driving long-term economic growth.
A number of pension schemes have also committed to voluntarily increasing the proportion of member assets invested in these “productive” UK assets between now and the end of the decade. While the Government has not mandated schemes do this, reports suggest the threat of this has influenced these providers’ decision to shift their approach.
And there is a clear risk that conflating political goals with people’s pensions will mean the former gets prioritised over the latter.
If you aren’t comfortable with this, you should speak to your provider to see if there are alternative investment options available. If there aren’t, you could choose to transfer your existing pension to a private pension like a SIPP, although you’ll need to speak to your existing scheme to see if this is possible and you will likely not be able to direct future auto-enrolment contributions to this scheme which may mean you lose out on your employer’s contribution.
SIPPs offer much more choice and many are available at low cost, although they aren’t covered by auto-enrolment regulations, including the charge cap.
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