Half a million new savers: something to be proud of?
June 12, 2013
The Pensions Regulator's May 2013 auto-enrolment monthly progress report shows 509,000 eligible jobholders have been newly auto-enrolled into pension saving up to the end of April. That's about the same as the entire working age population of Britain's third biggest city, Leeds. So the long awaited sea change in retirement provision is now clearly upon us.
Is this something to be proud of? Most private sector workers are being auto-enrolled into defined contribution (DC) schemes. Here are some recent research insights into DC member behaviour:
- Unchecked pots: A third of men and two fifths of women never check their DC pot.
- Unhelpful terminology: Three fifths of Britons find pensions terminology complicated and confusing and a barrier to effective retirement planning.
- Unclear targets: Less than a third of DC savers know what income they're aiming for, with two thirds preferring their employer to manage this for them.
- Improved DC governance: One thing which can really help here is effective ongoing governance of DC schemes. Parliamentarians agree - a recent House of Commons Work and Pensions Select Committee (WPSC) report highlighted what we all know: most DC savers are ill-equipped to manage their own retirement planning, and DC governance needs to compensate.
It's awards season with the
pensions industry again taking pride in its achievements. But perhaps in the DC
world, we should only really feel proud once DC pensions are much better
How will we know when we're there? Imagine members spontaneously feeding back that they understand their annual DC statements and have confidence in their DC saving. Now that would really be something to be proud of.
To discuss how to improve the governance of your DC pension scheme please contact your local contact. You can find your nearest Pensions team here.