By Adam Cadle
Confidence in defined contribution (DC) pensions is now so low that 58 per cent of consumers would prefer an inferior financial reward over a large pension contribution increase from their employer, according to Hymans Robertson.
In the company’s report The state of DC in 2012: why it needs to change and how, which surveyed 102 HR and finance directors, as well as 2,000 consumers in May 2012, it was revealed that just 42 per cent of consumers said they would choose a 10 per cent contribution increase over other financial rewards.
The decline of consumer belief in the value of pensions is emphasised by the fact that only 16 per cent of consumers said that a good pension scheme is a key factor when looking for a new job. Twenty-seven per cent said it makes no difference and 18 per cent said it is not very important.
Hymans Robertson head of DC Lee Hollingworth said: “This is staggering. Consumer trust in the power of pension saving is now so low that the majority would happily opt for a less generous financial reward over a huge boost to their pension pot.
“Under the old, final salary system, consumers had their hands held through retirement saving, ending up with a good pension pot. In the new world, that hand-holding has gone, while current contribution rates suggest at best a minimal chance of retiring on a good income."