The UK’s Financial Conduct Authority (FCA) has launched a consultation on whether it should require providers in the country’s £470bn non-workplace pension market to offer savers ‘default’ funds that take ESG considerations into account.
Non-workplace pensions (NWPs) are used by self-employed workers or to supplement workplace pension pots, with around 13 million accounts. The FCA said that many pension savers “did not find it easy” to choose appropriate investments, with many keeping their pensions in cash and few actively reviewing their investments.
Under the new proposals, NWP providers will offer savers a ‘default’ fund when they first open an account, designed to “meet the needs of the typical non-advised consumer choosing them”. On average, the consultation says, a default fund should offer savers “a better pension outcome […] than they could otherwise achieve”.
As well as having a diversified pool of investments, the default fu…