7th July 2014
Consumers have little trust in the pensions industry, which they associate with scandals, incompetence and wrong doing finds a new report.
The research from the government’s workplace pension scheme body, the National Employment Savings Trust, or NEST as it is better known, found that consumers feel “disconnected” from pension schemes.
However it also concluded that savers still 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 embezzlement, and market downturns are blamed on bad fund management.
The organisation is calling on the pensions industry to start taking consumer’s fears into account.
The report says: “The financial crisis has been particularly damaging for the image of investment. ‘Investment’ is considered to be the main culprit in the crisis. Given a lack of knowledge about what the investment industry is and what it does, members struggle to differentiate it from betting. Reports of ‘casino banking’ have underlined the perception that the investment industry is characterised by gamblers.”
The research also found that pensions tend to be in the news for the wrong reasons. As a result, the public has a generally sceptical view of the industry. Stories of people losing all their money endure in the collective public memory.
It seems that for many consumers ‘Maxwell’ is the biggest brand in pensions, as NEST’s survey found that people still referred to Robert Maxwell and his role in the collapse of the Mirror Group pension scheme.
Worryingly, the report also found that in consumers’ 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.
It concluded that the top three questions savers want answers to are:
Tim Jones, chief executive of NEST, says: “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.”