CIF Construction Workers’ Pension Scheme (CWPS) – Performance Analysis Teardown & Alternatives Review

The Construction Workers’ Pension Scheme which is affiliated to the employer trade body Construction Industry Federation has been very successful in getting financial contributions from their nearly 50,000 members –

– but have their group scheme members’ funds performed better than other open market alternatives?

Below we take a look at the funds’ performance relative to their annual management fees and allocation rates – so that you can assess the question of whether such group schemes are really passing on the savings of having a ‘captive audience’ ergo reducing marketing, operational and trustee legal/oversight costs.

CIF / CWPS performance vs alternatives

Assessing CPWS fees vs other alternatives

As a employee (or indeed an employer) in the private sector where the only game in town is a defined contribution pension – it is important to compare the market performance over a 5,10, 20 period whilst also being aware of negative compounding effect of outlier annual management charges and allocation rates.

• A placement fee is charged at entry point to some fund schemes – obviously this immediately dilutes the initial capital at inception – a high fee here would be sub-optimal especially in the context of ‘buying the dip’ where unit costs are low.

• Most every fund has an annual management charge (as the money manager has to make an income for the services it provides) – however there is often a very considerable spread i.e. 1% – 4% with respect to such changes and often your monies are ultimately channelled anyway via a series of manager intermediaries into very similar if not identical stockmarket instrument products in some cases.*

• An allocation rate is the amount of your pension/investment which is actually invested in performing assets – in many cases a fund manager will retain a percentage (often a reasonable 1% but sometimes as high as 4%!) as a non-deployed cash carry which is a effectively an additional fee and ergo a compounding drag on your policy performance irrespective of market conditions.