A large proportion of communication with existing and potential DC pension scheme members is failing, largely because it is mis-targeted, according to BlackRock.
Research by the group also found basic information needs are not being met as employees are put off by too much jargon and not enough education on the benefits of pensions.
Employees feel annual statements are not clear on how much they need to save and the value of what has been built up so far, says BlackRock.
“It’s up to the pensions industry and the Government to do all we can to help members understand and engage with their retirement savings. They not only need clear answers, they also need to know the right questions to ask in the first place,” says Steve Rumbles, MD and head of UK DC at BlackRock.
Out of the eight focus groups of 18-65 year olds surveyed, the research found the level of ignorance about pension benefits was extremely high among all age groups.
BlackRock says people simply do not understand the basic structure of a pension vehicle or the benefits of paying into a pension.
Public perception of the ideal time to start saving for retirement shows many people believe it is either too early, or too late and there are always more pressing demands for their income, says BlackRock.
The research found saving for a pension comes behind making mortgage repayments, paying off student debt, looking after children, parental care and maintaining a reasonable quality of life.
Ease of joining was found to be the biggest incentive for joining a company pension plan, boding well for the government’s introduction of auto-enrolment in 2012, says BlackRock.
Over half of active members in the private sector company pension schemes are in a DC scheme rather than a DB now and this trend is set to continue, says Rumbles.
However, unless coupled with automatically increasing contributions, ideally when a member’s salary increases, contributions tend to remain at the same level as when members joined, it warned.IFAonline
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From 6 April 2019