Addressing pension scheme investment cost disparity

11 October 2021

David Porter, Director DC


David Porter
Director, DC

David Porter explains how Mobius Life can help DC pension trustees develop cost-effective, sophisticated default funds for members with small and large pension pots.

Small pension pots have become the “problem child” for defined contribution (DC) scheme trustees. As we know, a pot with only £50 or £100 is just as expensive and complex to administer as a large pot. There’s also often a lack of engagement from members, who may have gathered multiple mini-pots from different employers. What’s more, it can be really easy to lose contact with members if they move and don’t keep the trustees updated.

At the same time there is pressure from the government and regulators to keep costs for members as low as possible. There’s the charge-cap on default funds of 0.75% and the government is planning to stop providers levying a flat fee on members with small pots under £100. Now the Pension Regulator and Financial Conduct Authority has added to the challenge with their Value for Money discussion paper. This aims to ensure members’ funds are “well invested and their savings are not eroded by high costs and charges.” And rightly so!

Efficient operational delivery and execution is key to keeping costs down. One way for schemes to reduce administration cost and risk is to rethink the way the default fund is structured and delivered. Many default portfolios are constructed
using individual funds; managing these at a member level is largely inefficient, introduces risk, increases costs and can confuse members; reducing engagement and possibly member outcomes.

Or is there another way? Using the Mobius Life platform, pension trustees can benefit from sophisticated, thoughtfully constructed default funds, designed to Trustees’ exact specifications, blended into one or a choice of default funds, simplifying delivery and member communications.

Once trustees have defined their default fund investment strategy, we manufacture it from scratch or replicate an existing strategy, using our expertise and technology to meet our clients’ exact needs in a highly cost-effective manner. We’ve already created multiple bespoke default funds and other specialist funds for DC scheme members, including target date funds, zero-fee index funds, private asset and pooled property funds as well as structured equity solutions.

Efficient delivery models and blended fund structures can help reduce risk, improve schemes’ commercials, in turn helping manage the costs of the growing small-pot problem child. If you want to know more about how we can help you reduce your costs, call us today.


Mobius Life Limited 7th Floor, 20 Gresham Street, London EC2V 7JE
t: + 44 (0)20 7847 3300 f: + 44 (0)20 7847 3399 w:
Mobius Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales at: 7th Floor, 20 Gresham Street, London, EC2V 7JE. Registered No. 3104978. For your security telephone conversations may be recorded.

Latest news

Reducing implementation risk for pension consultants
Craig Brown discusses how the Mobius Life platform can reduce implementation risk for pension consultants undertaking transactions for their clients.

Read more >

Evolving a pension administration eco-system
David Porter discusses the evolution of an investment administration eco-system, to deliver better and more efficient holistic solutions to sponsors and in turn improve member outcomes.

Read more >

Mobius holds its second annual investment managers seminar
Mobius Life held its second annual investment managers seminar on Thursday 28 April at The Brewery conference centre in London. Around 80 guests attended representing over 50 investment management houses.

Read more >

Our cookie policy

Mobius Life collects information during your visit to our website through the use of cookies. We use these cookies for a variety of reasons, most commonly to distinguish you from other visitors and to help us compile aggregate statistics about usage of our website. Read our cookie policy to find out more.