The Engagement Deficit in the Largest UK Auto-Enrolment Pension Providers

These findings are the outcome of ShareAction’s 2018 survey assessing the UK’s largest auto-enrolment pension providers. It follows our recent research into pensions communications for the next generation of savers, and the transparency and accountability of independent governance committees (IGCs). Jump to:

Ranking Key findings Recommendations

The big picture

There are now over nine million workers benefitting from workplace pension savings as a result of auto-enrolment. Their retirement goals are simple: dignity in retirement on a healthy planet. Do their pension providers share this vision? Our findings suggest that, despite pockets of best practice, there is still much work to be done.

ShareAction have surveyed the 10 largest auto-enrolment pension providers on responsible investment and member communications and engagement, and produced a ranking. This report details the findings of the survey.

How pension providers performed

73.86

1. NEST

260/ 352

57.95

2. The People’s Pension

204/ 352

56.81

3. Legal & General (contract-based)

200/ 352

55.39

4. Legal & General (master trust)

195/ 352

54.82

5. Aviva

193/ 352

54.82

5. Standard Life (master trust)

193/ 352

54.54

7. Standard Life (contract-based)

192/ 352

53.15

8. Scottish Widows

187/ 352

47.15

9. Royal London

166/ 352

39.48

10. NOW: Pensions

139/ 352

25.57

11. Aegon UK

90/ 352

1

12. Smart Pension

– withdrew from survey –

Key findings: What this means in real terms

Controversial weapons have a green light from many providers

While six of the nine auto-enrolment pension providers have specific policies to exclude companies linked to cluster munitions and anti-personnel landmines, only three exclude those with links to chemical and biological weapons.

Seven out of nine providers are lax on engaging companies on tax

Despite saver and societal concerns, auto-enrolment pension providers are lax on engaging with investee companies on aggressive tax policies. Only NEST and Royal London (through asset management arm Royal London Asset Management) have specific policies to encourage responsible tax conduct in investee companies. The remaining providers had no specific policies in place to engage investee companies on this matter.

Pensions boards are slow to represent the British population

Eight of the 11 boards of trustees and IGCs are made up of less than 30 per cent women. NOW: Pensions has the highest proportion of women at 60 per cent, while Royal London’s IGC contains the fewest women, with 17 per cent.

Providers are missing their chance to connect with savers

Five out of eight providers (Scottish Widows do not monitor this data) found that less than 20 per cent of members have recently logged into their online pensions platform.

The default is climate chaos

Default funds represent a climate risk lottery. NEST is the only provider that incorporates climate-related financial risks when setting the default funds’ investment managers’ performance objectives and reporting requirements. NEST is also the only provider to have a measurable and time-bound target to reduce the portfolio’s exposure to climate-related financial risks.

Recommendations for pension providers and regulators

Following in-depth analysis of the survey responses, a number of recommendations to improve retirement outcomes for members emerged. We have identified actions for the 10 auto-enrolment pension providers to take, and separately, the FCA, The Pensions Regulator, and the Department for Work & Pensions.


Recommendations for auto-enrolment pension providers

Responsible Investment

  • Recommendation 1. Auto-enrolment pension providers should explicitly state their responsible investment expectations for all asset managers, in-house or external, active or passive, ensuring savers’ best interests are met.
  • Recommendation 2. Incorporate targets and products that address climate-related financial risks into default fund investment.
  • Recommendation 3. Improve board and IGC diversity.

Communications and Engagement

  • Recommendation 4. Report annually on policies and programmes that seek to engage members, and share knowledge within the industry on best practice.
  • Recommendation 5. Commit to an annual member meeting.
  • Recommendation 6. Commit to a third party audit of member communications and engagement.

Recommendations for regulators

Systemic change

  • Recommendation 1. Set a timeframe for auto-enrolment pension providers to incorporate the Task Force on Climate-related Financial Disclosures core recommendations.
  • Recommendation 2. Encourage auto-enrolment pension providers to set targets to improve diversity on governance boards.
  • Recommendation 3. Require providers to annually report on their strategies to increase both member engagement in general and each individual’s contributions.
Colette St-OngeThe Engagement Deficit