Saving with group or individual personal pension schemes: How much difference does it make?

Anna Zalewska

Research output: Working paper / PreprintWorking paper


It is commonly argued that seeking the advice and services of wealth mangers is financially beneficial. However, the literature also suggests that wealth managers are skilled in favoring financially savvy investors by offering them lower fees. This paper looks beyond the fee differentiation issue and addresses the question of whether wealth managers engage in another form of investor discrimination by offering similar individual investors different quality investment opportunities according to whether, or not, an ‘informed’ third party is negotiating on the investor’s behalf. Using a sample of 14,429 individual personal pension funds (IPPs) and 1,681 group personal pension funds (GPPs) offered to UK investors over 1986-2015 (adopting cross-section, time-series and propensity score matching analysis on a range of sub-samples, investment styles and sub-periods) we show that GPPs statistically and economically outperform IPPs. We show that the results hold in the sample of providers offering both GPP and IPP services and, thus, cannot be explained by the market segmentation argument or sample selection bias. We also document that GPPs tend to have tougher performance benchmarks and, surprisingly, that tougher performance benchmarks are associated with better benchmark-related performance.
Original languageEnglish
Number of pages81
Publication statusUnpublished - Apr 2018


  • pension funds
  • performance
  • benchmarks
  • individual investors


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