Third of savers have 'no trust’ in pensions industry

Third of savers have 'no trust’ in pensions industry

In 2021 there was a small rise in members’ trust in pensions, but almost a third (31.5 per cent) still have “no or very little trust” in the industry, according to a Trafalgar House survey.

The pension administration firm's Trust and Confidence Index 2021 polled 2,000 people and found the number who expressed no or very little trust in the pensions industry had declined slightly from 34.5 per cent in 2020. 

There was a similar fall in the number of respondents who had trust in the industry, from 26.7 per cent down to 25.5 per cent, and only 14.9 per cent said they felt the industry positively impacted their saving levels.

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Savers had more faith in their own decision-making, with 58.6 per cent either confident or very confident in their choice of pensions provider, investments (57.8 per cent) and level of charges (47.2 per cent), though confidence in the amount they save fell from 49.5 per cent to 46.6 per cent.

Despite their overall confidence in their own decision-making, most members (69.8 per cent) believed they would have slightly or much less than they need to retire comfortably, while just 9.3 per cent said they would have more than they needed.

Daniel Taylor, client director at Trafalgar House, said: “Our research highlights the significant gap between the industry’s views on member engagement and the reality of what members actually experience.

“Although we have seen some small positive improvements in this year’s figures, the industry is still a long way from delivering on its duty to protect and support members’ long-term saving plans. To see so many people again state their lack of trust in the industry, and that this is negatively affecting their savings and decisions, shows that much more needs to be done to build relationships with members.”

He suggested that “a small degree of comfort” could be taken “from the needle moving slightly more favourably during what has been a tremendously difficult period for savers”.

“The versatility and flexibility shown by much of the industry seems to have been noted — a surprising move when we could have expected the scores to head in the opposite direction given the pressures caused by the pandemic,” Taylor continued. 

"Winning this small battle is, however, overshadowed by the industry’s overall losses in the war to win member trust and confidence. We must now hope that further efforts this year will continue the trend towards more positive scores in our next index.”

The struggle with pension terms

The survey also revealed significant gaps in members’ knowledge and understanding of key pensions terminology.

Annuity was the most familiar, with 46.5 per cent having heard of it before, but only 31 per cent said they had heard of auto-enrolment, and more than a third (34.1 per cent) said they had never heard of seven of the 10 “most common and fundamental retirement terms”.

Four out of five people who had heard of auto-enrolment were confident they could explain the concept to friends and family, while 76.2 per cent felt they could explain the normal retirement date.