I’ve been waiting for this. A report from an insurer that talks to my and my staff’s actual experience of saving into a workplace pension

Here is a medium sized employer with a highly financially literate workforce engaging with the workplace pensions that it invests its and its staff’s money into.

PIC is  a member of the Association of British Insurers. I had  expected  another anodyne paeon to engagement, a means to increase per capita savings rates without damaging the P/L.

I was wrong

As an employer reading PIC’s,Pension Engagement Policy Report,  I can see why most providers dread employer governance committees. Here’s PIC’s observation of what happened when staff started “engaging” with their pension.

Significantly, however, even as their knowledge of pension options rose, employees became less likely to report themselves as depending on pensions in later life.

This is consistent with the focus group findings, which suggest that the more familiar people become with the reality of DC pensions, the less confident they are in those pensions.

When you look closely at  what employees are saying , you find a deep-rooted scepticism about the independence of advice,

Respondents showed no significant enthusiasm for
independent financial advisers: many respondents
did not believe IFAs are unbiased or trustworthy. A small
number had used IFAs, but few of those regarded the
cost as justified. Some said they put most trust in friends
and family over pension issues.

When it came to who to trust, it was unsurprising that

“None had heard of Pension Wise“.

If there is a trusted source of “guidance” – it comes from the TV

“Martin Lewis has some name recognition
and trust”.

The information people get is not about pensions but about the size of the pot. there is no connection with what kind of lifestyle that pot could buy.

“Logged in, looked at the number. I’m happy
enough with that, but I have no idea what I should
have in there – it’s meaningless. I just took stock of
the number, didn’t even look at where my money
was invested – you just can’t know how you’ve
been doing.”
Female, 30s

If you turned up to the Pension PlayPen coffee morning today , you would have heard Arun Muralidhar talk of buying later life income with every payment sent to the pension record keeper. His contention is that many people cannot cope with the uncertainty of investment and of the nastiest hardest problem in finance – making an income last as long as you do,

Judging by this report, Arun should be selling his “selfies” at PIC.

This quote should be written on the gravestone of DC, as and when we reconnect it to pensions.