The UK has a very mature pension industry underpinned by a national pension scheme which is paid from National Insurance Contributions – a payroll tax. This national pension scheme is supplemented by both occupational and individual pensions. Defined benefit schemes were once popular among private sector employers, but virtually all have closed and many are now frozen. A robust insurance market has developed offering employers many options for reducing or eliminating their legacy defined benefit liabilities. Defined contribution plans are now the norm for private sector workers while most public sector workers still accrue defined benefits.

Pensions for the public sector are mostly provided through a series of nationwide occupation-based pension schemes. These schemes are unfunded. As a result four of the five funds reviewed were private sector pension schemes. The other organisation is the government fund set up to protect private sector defined benefit members in the event of insolvency.

More recently, the UK has required all private sector employees to be enrolled into defined contribution style arrangements. Employees may opt-out of these arrangements. There are several providers of define contribution style arrangements including a public competitor designed to be a low-cost and efficient fund manager, called the National Employment Savings Trust (or “NEST”). It is anticipated that in future years, some of these providers were grow such that they supersede some of the corporate funds in our review.