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Monday, 07 July 2014 11:56
'Excluded' consumers feel disconnected from pensions
Consumers feel 'disconnected' from pension schemes, the National Employment Savings Trust has said, as it calls for better communication from providers.
Research by the organisation found that consumers care deeply about retirement income and view it as extremely important.
Yet, they lacked understanding about pensions.
The report said that for these consumers, in their minds, pensions are already guaranteed and discovering this is not the case is 'shocking' to many.
However, those who are prepared to pay higher charges for greater certainty of outcome are very much the minority and they're not happy about having to do so.
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Tim Jones, chief executive of NEST, said the new generation of savers, who are being integrated into auto-enrolment, have been 'excluded' previously from a conversation about their needs and desires for savings in later life.
He said: "The new freedoms announced in the Budget have reaffirmed the importance of communicating effectively with members, encouraging better decisions and designing products that better meet savers' needs.
"From next year the choices available to savers broaden considerably and the need for providers to reflect this is one the industry as a whole is investigating right now.
"To do this successfully we must understand consumers' anxieties, aspirations and expectations; and design and communicate products in ways that are meaningful to them.
"As an industry we need to find innovative ways of providing greater certainty for savers, but without high charges and without foregoing inflation-beating growth.
"We also need to find ways to help consumers feel they are at the heart of a debate that is about helping them achieve their retirement goals."
The report's key findings were:
· Consumers feel 'disconnected' from pension schemes
· Historic disengagement shouldn't be interpreted as indifference. Consumers care deeply about building a retirement income
· The pensions market is undifferentiated for most consumers and they have difficulty in identifying different product features or the rationale for them
· Pension savers want to be reassured that the people responsible for growing their retirement savings are doing so responsibly and with an understanding of their concerns
· Consumers associate poor investment performance with incompetence and wrong-doing, with market downturns blamed on bad fund management
· Consumers are looking for a level of certainty in response to the question 'what will I get at the end', that isn't possible for providers to give
· Most consumers of DC pensions don't understand enough about the products or approach to know what the right questions to ask are.
The top three questions savers want answers to are:
1. 'What happens to my money?'
2. 'Is my money safe?'
3. 'What will I get at the end?'
Research by the organisation found that consumers care deeply about retirement income and view it as extremely important.
Yet, they lacked understanding about pensions.
The report said that for these consumers, in their minds, pensions are already guaranteed and discovering this is not the case is 'shocking' to many.
However, those who are prepared to pay higher charges for greater certainty of outcome are very much the minority and they're not happy about having to do so.
{desktop}{/desktop}{mobile}{/mobile}
Tim Jones, chief executive of NEST, said the new generation of savers, who are being integrated into auto-enrolment, have been 'excluded' previously from a conversation about their needs and desires for savings in later life.
He said: "The new freedoms announced in the Budget have reaffirmed the importance of communicating effectively with members, encouraging better decisions and designing products that better meet savers' needs.
"From next year the choices available to savers broaden considerably and the need for providers to reflect this is one the industry as a whole is investigating right now.
"To do this successfully we must understand consumers' anxieties, aspirations and expectations; and design and communicate products in ways that are meaningful to them.
"As an industry we need to find innovative ways of providing greater certainty for savers, but without high charges and without foregoing inflation-beating growth.
"We also need to find ways to help consumers feel they are at the heart of a debate that is about helping them achieve their retirement goals."
The report's key findings were:
· Consumers feel 'disconnected' from pension schemes
· Historic disengagement shouldn't be interpreted as indifference. Consumers care deeply about building a retirement income
· The pensions market is undifferentiated for most consumers and they have difficulty in identifying different product features or the rationale for them
· Pension savers want to be reassured that the people responsible for growing their retirement savings are doing so responsibly and with an understanding of their concerns
· Consumers associate poor investment performance with incompetence and wrong-doing, with market downturns blamed on bad fund management
· Consumers are looking for a level of certainty in response to the question 'what will I get at the end', that isn't possible for providers to give
· Most consumers of DC pensions don't understand enough about the products or approach to know what the right questions to ask are.
The top three questions savers want answers to are:
1. 'What happens to my money?'
2. 'Is my money safe?'
3. 'What will I get at the end?'
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