Almost half of all occupational pension scheme members spend more time reviewing their household bills, than their annual pensions statement, claims research from Watson Wyatt.
The results from Watson Wyatt’s Pension Research Forum, made up of a group of employers and pension providers, revealed 47% of members of both Defined Contribution (DC) and Defined Benefit (DB) schemes spent less than 10 minutes reviewing their statements, while just 14% of DB members and 16% of DC members spent longer than 30 minutes looking at their statements.
Figures from the survey, also reveal 84% of DC plan members and 72% of DB plan members believe more could be done to improve the usefulness of their benefit statements.
Of the DC members who spent less than 10 minutes reviewing their statement, the research found 90% did nothing to change their arrangements, although around one in four said this was an "active" decision not to make changes, as they were happy with their current situation.
But among those DC members who took over half an hour reviewing their benefits statement, there was a greater likelihood of change, with around 19% deciding to change contributions and 18% deciding to change their investment fund choices.
In addition the survey found DB members to be happier with their benefit statement than DC members, with 28% of DB members saying they didn’t want any changes, compared to just 16% of DC members.
Gary Smith, a senior consultant at Watson Wyatt, says: “Many people would study household bills, including telephone, electricity and gas statements harder than their annual benefit statement. It would seem the immediacy of saving a few pounds takes precedence over a long term and potentially life altering financial decision.
He adds the annual benefit statement is, for most people, the main piece of pensions communication they receive each year and should serve as a trigger for action.
But Smith says “Whilst some individuals may be happy with their arrangements, I'm worried that others are finding the information on offer either too complex, too technical, too dull or simply not helpful enough to hold their interest and ensure they make the right choices about their retirement provision,"
He warns this is of particular concern for members of DC plans, who should be regularly reviewing their savings level and investment decisions, even if they end up deciding not to change their current arrangements.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected]IFAonline
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