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viva did something rather important this week. The insurer announced a new “default” setting for the way that potentially millions of its pension customers will have the money in their pots put to work. Sounds dull, perhaps, but it is really quite significant — not just for the retirement incomes of tomorrow’s pensioners but also for where tens of billions of pounds in UK savings are likely to be channelled in future.
Aviva will allocate 20 to 25 per cent of a customer’s savings into private markets — the bucket of asset types that includes private equity and venture capital, private credit, infrastructure and property.
Its existing defaults for private assets are 10 per cent, and 0 per cent in the case of its low-cost pension offering. So suddenly, a far greater proportion of people’s savings is heading for this asset class, unless the sponsoring employer or individual saver opts out.
As we know from history, virtually no one does opt out. Default settings are one of the most powerful determinants of behaviour. Inertia, incomprehension, boredom and desire to do what other people are doing see to that.
