Pension savers are displaying a “worrying” lack of trust in their pension provider, new analysis from Broadstone has revealed.
Broadstone’s analysis of the Financial Conduct Authority’s Financial Lives Survey found that on a scale of 1 to 10, over a third (36%) of savers with at least one defined contribution pension said their level of trust in their pension provider was six or less. Only 15% said they had complete trust in their provider.
A lack of trust was found to be greatest amongst younger savers, with 43% of those aged 25 to 34 ranking their trust levels as six or less. This figure dropped to 32% among 55-64 years olds and 22% among the 65-74 age group.
The FCA also calculated an ‘engagement’ score among adults with at least one defined contribution pension into which they were making contributions. It found that over a quarter (27%) of adults had ‘very low’ engagement, with a similar number (24%) described as ‘low engagement.’ A lack of engagement was found to be greater among the younger generation, with nearly half of those aged 18-24 said to have very low engagement.
Damon Hopkins, head of DC workplace savings at Broadstone, said the figures highlighted inertia around pensions.
“The FCA findings suggest a significant proportion of this new cohort struggle to trust the industry and have low engagement. This is a problem because we need these employees to be looking at their pension and working out how much they are likely to need in retirement so they can make the right decisions as early as possible.”
Hopkins said it was also a ‘stark reminder’ of the variability in the quality of DC provision.
He added: “Providers and employers must ensure they are at the top of their game when it comes to administrative procedures, delivering robust risk-adjusted returns and engaging with members. By doing so we can drive a virtuous circle of positive change within the industry as motivated, trusting pension members derive increasing value for money from their scheme.”
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