Perceptions of what value for money means for pension scheme members focus around ‘good returns’, new research has found.

According to an extensive member research programme assessing perceptions of value for money and conducted by 11 Independent Governance Committees last autumn, the top rated attribute, out of 23, was ‘good returns’. An online survey suggested that this attribute was perceived by members as achieving a good outcome at retirement. This was underpinned by the quality of pension provision, member experience and total contribution going in.

In addition, other highly rated attributes relating to good value for money were ‘controls and safeguards’ and ‘reputable financially strong pension provider’, highlighting a considerable significance place on trust and protection for members.

The research also found that while members believe their workplace pension to be important for their retirement income, there are gaps and misconceptions in their knowledge and can lead to a reluctance to engage.

Furthermore, the IGC’s noted that charges are not in the top 10 attributes for the majority of members. It was found that members see the quality of the overall pensions experience and the end result as more important than an isolated price. “Members do not necessarily make the link between charging and a good return,” the results stated.

The organisations who took part in this research are Aegon, Aviva, Fidelity International, Legal & General, Old Mutual Wealth, Prudential, Royal London, Scottish Widows, Standard Life, Virgin Money and Zurich. NMG Consulting conducted the study.

Sackers associate director Jacqui Reid said: “This ground-breaking study has produced some interesting and unexpected insights into how members perceive value for money when it comes to pensions. This project has great potential to inform industry, government and regulatory thinking and help to improve member outcomes across the contract-based pensions landscape and beyond.

“The research has led the group to conclude that education and ongoing support is vital for increased awareness and to create a greater sense of empowerment in members. There is a great deal of willingness to engage if misconceptions can be peeled away and gaps in learning filled. Members are also more likely to engage and consider saving more (producing better outcomes), if they are more confident about the security of their pension.
As ever, the challenge is engagement and this requires ongoing education and communication, which will need to be tailored, through personalisation and appropriate channelling of information and support (whether it be web, mobile app, letter or some other means), to be effective.”

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