Analysis from the research shows that Investments (43%) are the key driver of ‘value for money’, ahead of service (17%), engagement (15%), governance (13%) and charges (12%).
Customers recognised that investments were important and that outcomes are related to movements in financial markets. More than half (51%) of savers, however, said they don’t fully understand investments. Customers also did not recognise the active role played by Scottish Widows, nor did they appreciate that they too could play a role in influencing outcomes at retirement if they wanted to.
Although almost two-thirds (63%) of customers did not understand what was meant by governance, once explained, it was deemed important by almost all. Over half (52%) of those questioned do not engage at all with their workplace pension and two-fifths (40%) are not confident when it comes to making decisions about their pension. When it comes to service, accuracy and timeliness were important aspects, but help and support was also highly valued by customers.
Charges are an area which most customers do not consider, with 60% of customers unsure whether charges are applied. When prompted to estimate what the total annual fund charges
might be, those customer estimates averaged 4.69%. Amongst customers who were aware that charges applied, the average estimate was significantly lower at 2.5%. When the maximum level of charge was revealed, only a small minority of customers felt charges were unfair.
Overall, just under half (46%) of customers say they’re either satisfied or very satisfied with ‘value for money’, and just 10% are dissatisfied. There is a positive correlation between levels of product engagement and levels of satisfaction.
Babloo Ramamurthy, Chair of the Scottish Widows’ IGC, said: “We felt it was critical to obtain meaningful and representative input from consumers. This first piece of work is a good starting point to give us some helpful insights and provide a platform to build on as we engage pension savers in quite a complex area. The initial findings will also serve as a benchmark against which future progress in delivering ‘value for money’ can be measured.”
Peter Glancy, Head of Industry Development at Scottish Widows, said: “I think it is important for both providers and Independent Governance Committee’s to understand what customers think is important when considering the issue of ‘value for money’.
“This first wave of results highlights some misperceptions that need to be addressed, including charges, governance and a mistaken sense that investment outcomes are determined simply by luck or by fate.”
* Value for Money’ :An IGC’s primary role is to scrutinise workplace pensions to assess whether customers - those currently contributing and those who have stopped contributing - are getting ‘value for money’.
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