Nearly 78 per cent of people say they “understand” pensions but there is still a need for the industry to greatly simplify member engagement, according to new consumer research conducted by Link Group.
According to the research, the pensions sector and educators have been effective in recent years in raising public awareness of pensions and the value of retirement planning, particularly among younger age groups. 86 per cent of respondents aged 18 to 34, the highest percentage of any age group, have a good understanding of pensions today, which is encouraging.
A growing expectation of personal ownership and accountability comes with more knowledge. More than half or 52 per cent of respondents say they would welcome the chance to choose their own investments and retirement plans. Nearly 60 per cent of respondents believe they should be more responsible for ensuring they have a good retirement income than the government or their company.
Almost 42 per cent of those polled believe it is still too challenging to make straightforward adjustments to their pensions, while 58 per cent of respondents say it is challenging to become more involved in their investments. Given that 33 per cent of DB schemes and 51 per cent of DC schemes, respectively, still maintain certain member records in non-electronic form, this is hardly surprising.
Additionally, nearly half or 48 per cent of members would prefer to choose their own pension plan, and 46 per cent do not think that their employers are in the greatest position to choose their retirement at all. More fundamental alterations to the UK pension system are also wanted. Over 76 per cent of respondents want their pensions to simply “port” with them when they change companies, and 67 per cent would prefer to have a single, super, or consolidated pension.
Link Group’s Retirement Solutions business in UK and Europe general manager Richard Wilson says: “The UK is at a critical tipping point when it comes to moving beyond education towards genuine engagement with members. This research demonstrates that there is an opportunity for the industry to leverage elevated member knowledge and demand for greater pension responsibility by simply making it easier for people to engage through the channels that best suit them. This will need the industry to move on from spreadsheets, manual processing and paper files and really move positively into the digital era.”
“Our research also shows that people want greater portability and consolidation of their pension schemes. This is something Link Group has been supporting in Australia for the last 30 years and we are currently researching how a ‘member-decides’ model could benefit the UK. As such, we are hugely encouraged to see the demand for greater personal control, ownership, and responsibility coming out as a key theme in this consumer research.”