Following the Government’s announcement of a Lifetime Provider model for workplace pensions, the Pensions and Lifetime Savings Association (PLSA) latest research highlights how more than two-thirds of employees want their employer to choose their workplace pension provider.
When given the choice, 69% of respondents expressed a preference for their employer to choose their workplace pension provider, as opposed to just under a third (31%) who would opt to make the decision themselves. This preference was notably higher among women, with 75% leaning towards employer selection, compared to 63% of men. A generational divide was also apparent, as 66% of savers aged 18-54 favoured employer selection, while a substantial 85% of those aged 55 and above shared the same sentiment.
The research also has found that a significant 55% of employed workplace pension savers expressed minimal confidence, stating they would be either not at all or only slightly confident in selecting a pension provider. In stark contrast, a mere 19% conveyed being extremely or quite confident in their ability to make such decisions. The gender disparity is evident, with men displaying higher confidence levels (26%) compared to women (10%).
Additionally, the survey delved into the perceived skills and knowledge required to compare workplace pension schemes and choose the right provider. The findings indicate that just under two-fifths (37%) believe they possess the necessary skills, while almost a third (31%) said they did not. The gender disparity continues in understanding, with 48% of men claiming proficiency, compared to 24% of women. Younger savers, particularly those in the 18-24 age group (44%), were more likely to express confidence in their skills compared to their older counterparts (27% of those aged 55+).
Joe Dabrowski, Deputy Director – Policy at the Pensions and Lifetime Savings Association, said; “This research highlights the importance savers place on their workplace pension scheme and the support their employer provides in choosing and managing high quality provision that will help deliver their retirement needs.
“As we can see, not all savers are the same, from generational to gender disparities there are clear differences in knowledge, understanding and confidence.
“While the sector examines the concept of a Lifetime Provider, it is important that we carefully consider the implications the model may have on good saver outcomes, especially given long-established concerns about general financial literacy, as well as the average savers engagement and understanding of pensions.
“This will be important for the majority of employees who do not want to choose their own provider and those who lack confidence in making their own choice. Equally we must protect those who may have confidence, but in most cases will not in fact have the appropriate skills or knowledge to make good choices.”