Barings Asset Management has suggested that auto-enrolment will create more risk averse investment strategies.
Auto-enrolment has already been implemented for the largest firms and means employees are automatically enrolled into a workplace pensions scheme, unless they choose to opt out. It is estimated it will result in between five to eight million people saving into a workplace pension scheme for the first time.
Some 40 per cent of pensions professionals surveyed by Barings said that it would mean more risk averse investment strategies as much of the expected £9bn in annual contributions will be made by those who are were not familiar with saving. The high volume of savers also mean there will be wider range of profiles and saving desires.
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Andrew Benton, Barings head of UK and international institutional sales, said: "The onset of auto-enrolment constitutes a major shift in the UK pensions landscape. Figures from the Government show most new savers will be those on relatively low incomes who have never saved into a pension before and have, therefore, a lower risk appetite."
Respondents also felt there needed to be greater communication between trustees of pension schemes and their advisers. They also felt more should be done to inform scheme members about their investment options.
Mr Benton said: "Considering the high influx of new savers to the pensions world, it is not surprising that communication will become even more key for trustees and pension scheme professionals. Decisions made will have an impact on even more savers, many of whom will have a wider range of profiles in terms of risk and desired savings outcomes."

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