The organisations who collaborated on this initiative are Aegon, Aviva, Fidelity International, Legal & General, Old Mutual Wealth, Prudential, Royal London, Scottish Widows, Standard Life, Virgin Money and Zurich. NMG Consulting conducted the research study.
The key findings of the research are:
1. Perceptions of what value for money means focus around ‘good returns’: In the online survey this was the top rated attribute; the workshops revealed this is much broader than investment returns but is perceived by members as achieving a good outcome at retirement, underpinned by the amount of total contribution going in and quality of the pension provision and member experience.
2. Members are not engaged with pensions but believe they are important: There are gaps in member knowledge and misconceptions that impact member behaviours, including a reluctance to engage with pensions, but the majority of members perceive their workplace pension to be important for their retirement income.
3. Strong emphasis on the importance of trust and protection: ‘Controls & safeguards’ and ‘reputable financially strong pension provider’ are both highly rated attributes.
4. ‘Charges’ are not front of mind and are not in the top 10 attributes for the majority of members: Providing they are in line with market average, charges are not a leading attribute. The workshops highlighted that members perceive the quality of the overall pensions experience and the end result are more important than a headline price in isolation. Members do not necessarily make the link between charging and a good return (although IGCs and providers fully understand its importance).
5. Education is highly influential in helping members understand how a good outcome at retirement can be achieved: Once members begin to understand how to achieve a good outcome at retirement, they place more emphasis on support and engagement.
What next?
IGCs and their providers are considering these results, which are member perceptions and views (and therefore one component of an IGC’s/provider’s analysis of value for money), alongside their own views and professional judgements, on what is important for value for money.
Jacqui Reid, associate director at Sackers who co-ordinated the research study, comments: “This ground-breaking study has produced some interesting and unexpected insights into how members perceive value for money when it comes to pensions. This project has great potential to inform industry, Government and regulatory thinking and help to improve member outcomes across the contract-based pensions landscape and beyond.
“The research has led the group to conclude that education and ongoing support is vital for increased awareness and to create a greater sense of empowerment in members. There is a great deal of willingness to engage if misconceptions can be peeled away and gaps in learning filled. Members are also more likely to engage and consider saving more (producing better outcomes), if they are more confident about the security of their pension.
“Improved perception of value for money by members will be achieved through more effective delivery of the key attributes. As ever, the challenge is engagement and this requires ongoing education and communication, which will need to be tailored, through personalisation and appropriate channelling of information and support (whether it be web, mobile app, letter or some other means), to be effective.”
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