Most (53%) pension scheme members would prefer their employer to choose a provider demonstrating strong stewardship activity, even if it is 10% more expensive, the National Association of Pension Funds (NAPF) has said.

According to NAPF data, even though 65% of members identified that the level of costs and charges is one of the most important factors for employers when choosing a pension provider, 60% said they would be interested in their provider undertaking stewardship activities.

The NAPF's report revealed that despite 39% of the respondents not knowing how their pension savings are invested, 65% said they would want to know more general information about asset allocation while 63% wanted to know more about specific countries that individual's savings may be invested in.

Will Pomroy, NAPF policy lead for stewardship, said: "Rightly there has been considerable attention recently on the level of costs and charges within defined contribution (DC) schemes.

"However, this research raises an important question for those at every stage of the investment chain about whether the definition of 'value' is too narrowly viewed, and being defined without the input of scheme members?

"It is noteworthy that despite low awareness amongst consumers of where and how their pension assets are invested, there is an evident latent interest in knowing more. Given the clear preference of scheme members for their employers to favour providers with strong stewardship offerings, it is critical they are able to have confidence they are being enrolled into schemes that provide value for money and are equipped to act as good stewards of their pension savings."

The NAPF said that 68% suggested they would prefer their employer chose a pension provider that made a "special effort" to invest in companies with an ethical stance above one that did not, assuming that the return on investments between the two providers after costs was roughly the same.

However, only 48% would prefer their employer to choose a provider with an ethical investment approach, despite the possibility of lower returns and higher volatility.

Graham Vidler, NAPF director of external affairs, said: "Good governance is the cornerstone for good pension provision. Our research is designed to assist those responsible for workplace pension schemes, including trustees, scheme sponsors, pension providers and fund managers, to weigh up what scheme members consider 'value for money'."

First published 03.07.2014

monique_simpson@wilmington.co.uk