Trustees should not become complacent by thinking members who are auto-enrolled (AE) into default funds are adequately provided for, according to AHC.
Speaking to PP, head of engagement Karen Bolan said trustees have a great deal of responsibility to ensure the default fund is good enough, as most members will stay in it.
She said: "I wonder how much trustees understand their responsibility for getting the default right and how members view the default. Members typically come from a different angle.
"If somebody else has already made a decision i.e. the trustees, by putting a default in place, the members will go for that because they believe the trustees are far better informed to make a decision. This puts a great onus of responsibility on the trustees to make sure the default is the best one for their membership."
Default funds cover the three most important factors which determine a member's pot size, including contribution rates, investment choices and retirement age, she said.
Default funds were a particular concern due to minimum contribution rates being set so low. "There is a danger that when a member comes into a pension and has the minimum level of contribution, they think the box is ticked," Bolan added.
Understanding a scheme's membership and sending targeted messages through a smart communications strategy could boost contribution rates, she continued.
In November 2015 JLT Employee Benefits warned differences in the performance of the biggest defined contribution default funds meant some members could miss out on more than £500,000 of retirement incomes.
Returns in the top ten funds over the last three years varied from 3.5% to 9.5% a year.
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More than half of BlackRock’s flagship UK defined contribution (DC) default fund’s assets will be invested in ESG strategies by June 2021.
Graeme Bold says the right communications can improve both the level of savings and the outcomes for savers.