UK consumers are now more knowledgeable about pensions and ready to take greater responsibility for their retirement arrangements, according to new consumer research conducted by Link Group, a global leader in retirement solutions. The research found that 78% of people ‘understand’ pensions, however, there is still a clear need for the industry to significantly simplify member engagement.
The research suggests that the pensions industry and educators have been successful in building better public knowledge of pensions and the importance of retirement planning in recent years, especially in young age groups. Encouragingly, 86% of 18-34 year olds interviewed now have a good understanding of pensions, the highest of any age group.
With greater knowledge comes a growing expectation of personal ownership and responsibility. Almost 60% of people feel that they should be more responsible for ensuring they have a good retirement income (versus the Government or their employer), with more than half (52%) welcoming the opportunity to pick their own investments and schemes too.
However, the industry needs to leverage this growing sense of personal responsibility by making it simpler for people to engage in their pensions. 42% of those surveyed feel that it still too difficult to make simple changes to their pensions, while 58% of people are finding it difficult to become actively involved in their investments. This is hardly surprising given the recent TPR research that 51% of DC schemes and 33% of DB schemes still hold some member records non electronically.
In addition, 46% of members do not believe that their employers are best placed to pick their retirement at all, and almost half (48%) would rather pick their own pension scheme. There is also appetite for more structural changes to the UK pensions system. 67% of people would prefer to have a single, super, or consolidated pension and over 76% of people would like to see pensions ‘porting’ easily with them between employers.
In short, the pensions administration market in the UK has been under-invested in, which has eroded margin and the ability for companies to invest in solutions that meaningfully engage consumers in saving for their retirement. Link Group wants to change this.
Richard Wilson, General Manager of Link Group’s Retirement Solutions business in UK and Europe comments: “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.”