Well you may not find it news, but I do. I started out in 1984 selling pension policies to people who I met in Oxford Street and again at their homes. These people were promised ridiculous returns (13% pa on the Lautro illustrations), told nothing about costs and few will even get back what they put in because of commission paid to me for my labours. To put it in perspective , my tax returns for my first three years had me earning below the nil-rate band – this activity profited no-one – except the insurance companies.
Now things are different. Ipsos-MORI were told to ask around 1600 adults in the UK , the kind of adults I was talking to – back in the day – if they felt saving into a pension was a normal thing to do.
83% now say it is the normal thing to do, only 4% think it abnormal (the rest had no view). This represents a sea-change since 1984 when the idea that ordinary working people should be making plans for their retirement was greeted with blank disbelief by most of my would be customers. You were either in a works scheme or you would be on the state.
Ipsos MORI also asked if people thought saving into a workplace pension was a good thing for them.
80% thought it would be , only 7% objected – roughly equivalent to the opt-out rate. Not only do people think it is the “norm”, they think saving into a workplace pension is good for them. Confidence in saving into workplace pensions is much higher than I could ever have conceived 33 years ago!
Finally Ipsos MORI asked whether people thought it would be good to see a hike in their savings into a workplace pension (something that will be happening in a few months).
Once more, the numbers are positive with 79% saying they thought this financial medicine would do them good . Only 6% disagreed with a slightly higher number of people not having an opinion.
This may not be news to you – but it’s news to me!
That people feel this way into pensions at this stage of the auto-enrolment implementation is incredibly good news. Not only do people think saving is the norm, but they think it is good for them and they are even sanguine about being nudged into higher levels of saving. If I was Charlotte Clark, head of the DWP’s pension strategy team I would be patting myself on the back.
There is a really important point here , not just for politicians but for all the stakeholders who are involved in auto enrolment.
Employers be aware, your staff see saving into these workplace pensions as a positive, this is your chance to capitalise and maximise your return on the investment you and they are making in their financial futures.
Business advisers be aware, dissing auto-enrolment and the employer duties is yesterday’s news. It is no longer clever to be cynical, the experiment is working and now is the time to encourage your clients to take a positive view about auto-enrolment.
Providers be aware, you and your trustees/IGCs are pushing at an open door. Your customers are with you not against you. You do not have to be on the defensive, now is the time to agree with your customers – this thing is working.
The message is getting through
When you are starting out on getting fit, you do not look to Daley Thompson’s fitness plan. You start slowly and build, you could be a wannabe Daley Thompson but the chances are you’re just trying to cut down on the flab and not get out of breath doing up your shoelaces!
Most of us are at the “first month going down the gym” stage of pension saving, we don’t have the full fitness regime and we know it, we know more is to come but we know at least that we are on our way.
Steve Webb was on the radio this morning talking about how it’s going to get tougher in April 2018 and 2019. It will get tougher, but then we are already in training.
I am proud to be involved in pensions, proud especially to be involved in helping employers set up and run workplace pensions. I and our business partners have great plans and we are going to use the next few months before April 2018 to raise a positive awareness among employers, business advisers and staff about what is happening.
I thought that would be a challenge, but reading those charts from IPSOS MORI, I think it is a challenge which we can rise to!
It is unfortunate that bias is used to set the scene the advisor has moved on since 1984 and Modern Portfolio Theory isn’t so modern Life time jobs only exist in the public sector and promises made by DB are being reneiged on by “Modifications to the rules” on a regular basis making a mockery of transfer value comparisons which assume that promised will be honoured and pretend that sponsoring companies have a life expectancy greater than the youngest potential beneficiary
Auto enrollment has members because of compulsion at the cost of £1.2bn subsidy not through choice some Master Trusts struggle to perform and lower paid are robbed of tax credits
To add balance you might review the Sunday Times article
https://www.thetimes.co.uk/article/millennials-your-retirement-is-dead-in-the-water-psgfdnfp3
John, that’s a very grumpy response! I do agree that net pay schemes aren’t doing the low paid any favours, that NEST is in an overspend and that the decline of DB since 1984 is sad.
But most poorly paid people were little served by defined benefit schemes and were rightly distrustful of the private pension system. My point is that this has been turned around. I think ordinary people are right to trust most modern workplace pension schemes which are doing a good job for them (at least in saving their money). You know I want to see improvements to help them get pensions not pots, but that can still come.
So we’ll have to disagree on this!
I am not grumpy just frustrated with the constant backward looking knocking of advisers. Sure there are many failed salesman from the 70’s and 80’s recruited on the SJP model of the past with a chip on both shoulders. Interest rates dictated by the regulator at current interest rates (13%+) have a daja vu feeling today at the other end of the spectrum.
My concern is that you are damaging faith in pensions a n d savings. Just listen to the radio 4 “The Death of Retirement”
Winging Poms with few solutions