It is not unusual, as at Siemans, that the majority of staff invest their defined contribution (DC) pension in the firm's default investment fund. With the new pension freedoms and particularly for those staff who are in the 10 to 15 years flight path to retirement, this may not be the best investment strategy for their pension. Many staff don't understand what the default fund means and fewer understand the underlying investment asset classes, how they may perform differently over time, the difference in intrinsic risk and that they may deliver different returns.

Since the pension reforms, this is the level of understanding that staff will need to ensure they make well informed decisions with their DC pensions, particularly as they approach retirement.

Financial education can address this issue, as well as help to engage staff more with their pension savings strategy throughout their career and provide more targeted support in preparation for retirement.