BlackRock and Zurich Corporate Pensions have emerged from the period of extraordinary market volatility as the leading providers of bundled defined contribution (DC) corporate pension services in the UK in terms of the overall quality of their propositions, according to research by Greenwich Associates.
BlackRock and Zurich Corporate Pensions received the highest ratings for overall quality from 21 leading corporate benefit consultants interviewed by Greenwich Associates as part of its most recent research on the UK pension industry.
Although neither firm dominates the market in terms of number of clients, assets or even coverage among consultants, both have distinguished themselves through their focus on quality and their ability to get the basics right by offering well-designed and highly flexible investment propositions – precisely the qualities leading UK benefit consultants tell Greenwich Associates they’re seeking from their providers.
“Bundled corporate DC providers in the UK have had to step-up their game following the roller-coaster ride experienced by so many employees who found themselves invested – by default – in indexed equity funds during the height of the market crisis,” said Greenwich Associates consultant Marc Haynes.
The DC industry has received some blunt criticism as it struggles to address the perceived quality gap relative to final salary pension arrangements, including charges of excessive fund choices, inappropriate default funds and ineffective pre-retirement de-risking.
“There are signs that these issues may finally be receiving the attention they deserve as pension providers focus their efforts on upgrading their investment propositions while other proposition elements, including scheme administration and servicing, are increasingly perceived as hygiene factors – fundamentally important, but no longer reliable sources of competitive advantage,” said Greenwich Associates consultant Chris McNickle.
Greenwich Associates: 2009 UK DC Corporate Pensions Study
The results of Greenwich Associates’ annual 2009 UK DC Corporate Pensions Study reveal the following trends:
- Leading consultants are working with their corporate clients to ensure that DC scheme default funds (which reached record levels of usage in 2009) are appropriately diversified, in some cases recommending sophisticated multi-asset solutions.
- Blended funds and bespoke arrangements are becoming increasingly common, and the ability among providers to fully accommodate consultant requirements has become the focus of intense development efforts.
- Only a minority of employers are reported to be adopting auto-enrolment in advance of National Employment Savings Trust (NEST) – an understandably slow pace in light of the more immediate challenges faced during a tumultuous 2009.
- Corporate wrap is gaining momentum with the strong backing of the consultant community – although Greenwich Associates questions how many providers the market will ultimately be able to accommodate.
Greenwich Quality Leaders: UK DC Pensions
BlackRock and Zurich Corporate Pensions achieve the distinction of being named the 2009 Greenwich Quality Leaders in UK Defined Contribution Corporate Pensions. Greenwich Quality Leaders are firms that have distinguished themselves by receiving overall quality ratings from leading benefit consultants on key investment proposition, administration and servicing criteria that top those given to competitors by a meaningful margin.
Outside this top rank, Friends Provident and Standard Life are also worthy of mention. “With a much larger client base, and a wider set of employee benefit consultant relationships to manage, Friends Provident and Standard Life achieve a solid competitive position,” said Haynes.
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