NOW Pensions chief condemns UK default funds

The chief executive of low-cost provider NOW Pensions has slammed the default funds on offer across the industry.

Danish provider ATP launched UK-based NOW Pensions last year to challenge the National Employment Savings Trust in the auto-enrolment target market.

NOW Pensions chief executive Morten Nilsson told PP that some of his competitors’ default funds “were simply not good enough”.

He said: “We’re very pleased to see there’s a lot of debate around costs, but the other debate is some of the default funds and these fund structures are simply not good enough.”

NOW Pensions only offer one investment option – a managed diversified growth fund.

Nilsson said funds that maintain a high exposure to equities throughout a members’ lifetime are taking an unnecessary risk with their money.

He added: “Most of the people haven’t made a choice to end up in the default fund, and suddenly you have a pension fund or an insurance company taking a lot of risk the member probably didn’t quite understand would be taken on their behalf.”

Nilsson said he expects political pressure on the standard of default funds to escalate in the years to come.