Don’t underestimate SME’s hunger for investment know-how!


I am  frustrated by the capitulation of many in the pension industry to the challenge faced by inducting 1.2m new employers into our funded pension culture.

The Pension Apartheid practiced by the investment elite

At a recent event, Joanne Segers, CEO of the NAPF, began her talk “with the staging of auto-enrolment almost over…” for most employers in the UK it has not yet begun. Only 43,000 employers had staged auto-enrolment by February, 45,000 will stage in 2015 but those numbers increase by a factor of ten in 2016 and 2017.

Democratising the knowledge held by the few (the consultants,trustees and pension managers who will gather at the NAPF investment conference next week) , is going to be no easy business.

It is too easy to bundle small employers in a box and label them “fish and chip shop owners”.

Many small enterprises , including fish and chip shops, have owners and staff who take an interest in saving and are extremely financially savvy. They may be over the NAPF’s horizon but they are neither financially incompetent or “investment ignorami”.

Unfortunately, they struggle to get to the information they need to engage in investment issues as we have yet to evolve a satisfactory means to advise them on the products they can use and how they can be applied to support their staff to a better retirement.

But that needs not be the case. My good friend David O Harris, wrote to me yesterday offering me his international perspective.

The realities are that unlike the U.S., Australia , nz or South Africa , the UK clings on desperately for DB nostalgia . Surely for members smart default and retirement solutions are the way to go.  See 401(k) and united technologies in the New York Times of a couple of years ago where smart blended retirement income solutions becomes more apparent. We face a democratisation of risk as more people worry about living too long than dying too soon.

What do we mean by “democratising risk”?

Whether the countries David mentions really are “democratising risk” I am not sure, but I do get the sense that they do not have the “us and them” attitude to pension knowledge and skills that we have in the UK.

The ideas behind the best investment strategies that underpin 401k thinking- the Dimensional approach being an example, are equally available in the UK. As it happens, rates the Dimensional approach, sadly only available through the Supertrust master trust, as its top-rated DC investment strategy.

Both NOW and NEST have extremely sophisticated investment strategies, I know they are frustrated that the approaches they have adopted do not (currently) get properly discussed, I share with Otto Thorensen and Morten Nillson, a wish that these mass market pensions would be chosen for the good of their investments rather than out of name recognition (nobody gets sacked for recommending them)

But the target dated fund approach – another trans-atlantic import, is now embedded in a number of our workplace pensions including NEST, Blue-Sky, Smarter Pensions (Pension Trust) and most recently Trust pension. These sophisticated investment strategies are available through UK mastertrusts though the contract-based insurers have been slow adopters, sticking with clunky lifestyle strategies instead. TDFs get a high rating from pushing propositions that adopt them to the top of our investment rankings.

The insurers have done some work on their DC investment strategies, we rate Standard Life’s “GARS-lite” default that sits within Good to Go, for its thoughtful blend of a sophisticated product(GARS) and a pragmatic approach to cost (the cost diluting passive funds with which it blends). L&G’s multi-asset fund achieves limited diversification at a very low price and while there is a long-tail of stragglers, we see the majority of workplace pension providers offering sound investment strategies as a default.

Practicing what we preach

For those who are interested in our current rankings for investments, here are the investment scores we are currently using.

You may think it odd that we share this information for free. There are two reasons we do, firstly, this is just information, you cannot be knowledgeable until you understand why these ratings are give.

The second reason is more fundamental, research is only valuable if it can be applied to decisions. To make a decision on which workplace pension to use, you have to use these ratings alongside those pertaining to administration, governance, the business model, member facilities and at retirement options. There is no short cut.

Current Pension PlayPen investment ratings 


‘Single Investment Scores’

(out of 100)

SuperTrust UK


Standard Life (Active Plus III)






NOW: Pensions


TRUST Pensions


The Pensions Trust




Standard Life (Passive Plus III)




Legal & General


Family Asset Protection


Scottish Life






Friends Life


People’s Pension


Scottish Widows


Source; First Actuarial investment team.


People may be surprised to find the very popular People’s Pension, languishing at the bottom of the list. In many other ways, People’s is a great choice for small employers but they have been lazy on their investments and , until they come up with something more ambitious than their me-too lifestyle strategy, they will continue to be downgraded.

Democratising investment knowledge

Is this information confined to an elite group of companies that can afford actuarial consultancy? NO!

This information is available on this blog and it drives the metrics within Pension PlayPen. So when you purchase a workplace pension through our site, you get the thinking of some of Britain’s top DC investment consultants.

The likes of Adrian Kite, Richard Lunt, Mike Smaje and Mick Vickerstaff – the investment team who generate the investment research that informs our ratings, this blog and the metrics of are making their views available to ordinary employers who run SMEs that manage everything from fish and chip shops to hedge funds.

Our site aims to capture the investment sophistication of the owners and managers of these businesses and deliver investment education appropriately. We are currently working on a number of videos and audio power points that will be embedded into the site so that those making decisions, can – if they choose- do so on investment grounds.

Our ambition to allow SMEs and micros who want to take decisions on investment grounds is not a criticism of those that don’t. I am not made to feel an idiot by my friends at Quickfit who know I do not understand what an “exhaust manifold”is. Nor do they try and teach me to know or even to care that I don’t!

Yesterday I wrote that there is no shortcut to good practice. When someone fixes my brakes or exhaust of tyres, I expect as good a job as a small business owner as I would were I Richard Branson. I may not want to be told how the job was done, but I want to be impressed by a high quality of service and the skill and knowledge of those who do the work.

Whether the SMEs and micros we aim to serve , are savvy or investment literate, we aim to do the same great job for all of them, and that’s what we’ll be telling the Pension Regulator and the FCA as we strive for excellence in workplace pensions – HOWEVER SMALL THE EMPLOYER.



About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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