There is a “critical” lack of trust in the financial sector across all generations, as people fail to engage with their pensions, research by The Wisdom Council (TWC) has found.

The TWC survey, which questioned over 2,000 UK consumers, found that millennials are “still wary” of big banks after the credit crunch, while Gen X and baby boomers “haven’t seen anything to restore their faith”.

According to TWC, the research affirms assumptions that members are saving too little and have a limited understanding of saving, despite a willingness to learn, with just one in five recognising tax relief as a feature of workplace schemes.

TWC CEO, Anna Lane, said: “Ultimately, customers want clarity, simple products that flex with them and communication that speaks to them as human beings. Perhaps digital delivery, machine learning, behavioural science and creative product innovation could be the perfect storm that finally makes long-term saving not only accessible but exciting.”

The report also found that 40 per cent of millennials believe they have a defined benefit scheme, despite data from the Office of National Statistics showing that less than one in five under-29s have a final salary pension.

The gender pay gap was also highlighted in the research, with 40 per cent of women not having any investments compared to 25 per cent of men, while women also appeared less confident in their understanding of long-term financial planning.

Furthermore, engagement was highlighted as an issue across generations, with the younger generation more open to the idea of robo advice, and little likely to connect with the word ‘pension’, compared to the baby boomers who are “quite attached” to the word.

Despite this, 60 per cent expect to retire by their 60s, with 38 per cent believing they won’t hit retirement until beyond 70.

TWC head of investor insight, Dawn Hyams, said: “We talk to investors on a daily basis through our work, and even we were surprised by the huge gap in pension understanding. It isn’t that customers don’t want to know – they were hugely engaged in the focus group sessions we ran – but they are still at a loss when it comes to most communications around their retirement savings.

Hyams added that the industry is too quick to jump into the detail when talking through the details.

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