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Communication
with existing and potential defined contribution (DC) pension scheme
members is failing because it is mis-targeted, according to research
by Blackrock.
The research, conducted across eight focus groups of 18 to 65 year
olds with a broad socio-economic split, shows that basic information
needs are not being met.
Blackrock found that there is a high level of ignorance regarding
the benefits of a pension amongst all age groups. People also tend
to leave saving for retirement until student debt, mortgages and
other financial commitments are settled, and most employees will
only join a pension scheme if it is made easy to do so.
When it comes to the psychology behind pensions literature, it was
discovered that ‘saving’ for retirement is a more attractive
prospect than ‘investing’. Research found that the word
‘invest’ carries negative connotations, yet ‘savings’
make them safe, visible and simple to understand.
Steve Rumbles, managing director and head of UK DC at Blackrock,
commented: “Over half of active members in private sector
company pension schemes are in a DC scheme rather than a DB one.
This trend towards DC will only continue.
“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.”
Rumbles added: “Use of SMART (Save More Tomorrow) savings
can also help members put more into their pensions, through automatically
increasing contributions as their salary increases.”
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Pensions Age July 2008
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