Saving with Group or Individual Personal Pension Schemes: How Much Difference Does It Make?

48 Pages Posted: 21 Feb 2017 Last revised: 7 Feb 2021

See all articles by Anna (Ania) Zalewska

Anna (Ania) Zalewska

University of Bath - Centre for Governance, Regulation and Industrial Strategy; School of Management

Date Written: January 2, 2021

Abstract

The quality of services provided by institutional investors has attracted considerable attention. This paper adds to the debate by showing that institutional differences in setting up define contribution personal schemes have an economically significant impact on the returns. Using a sample of 10,326 UK defined contribution personal pension funds over July 1990 – June 2019, I show that pension funds that have a third party involved in contract setting and subsequent oversight deliver 0.96–1.67% higher gross returns and charge 0.7% lower fees than pension funds offered directly to the public without any third, well–informed party involved. I also show that the introduction of additional governance bodies in 2015 resulted in widening the performance gap which further supports the notion that investment governance has a material impact on fund performance. The results highlight the importance of investment oversight and call for more protection for individual investors.

Keywords: pension funds, defined contributions, performance, benchmarks, individual investors

JEL Classification: G22, G23

Suggested Citation

Zalewska, Anna, Saving with Group or Individual Personal Pension Schemes: How Much Difference Does It Make? (January 2, 2021). Available at SSRN: https://ssrn.com/abstract=2920818 or http://dx.doi.org/10.2139/ssrn.2920818

Anna Zalewska (Contact Author)

University of Bath - Centre for Governance, Regulation and Industrial Strategy; School of Management ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom
+44 0 1225 384354 (Phone)
+44 0 1226 384354 (Fax)

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