The pensions and long-term savings industry is trusted on an organisational level, but mistrusted at a sectoral level, research has found.
According to Just Group’s Rebuilding Trust in Long-Term Savings report, mistrust in this industry is undermining the purpose of financial services industry to help people achieve long-term financial stability.
The report highlighted that when asked separately to rate how they feel about the state pension, defined benefit pensions and defined contribution pensions, despite reporting an overall mistrust in pensions, the level of trust among respondents varied considerably across the three types. Only a handful reported a lack of trust in all three.
Reasons given for mistrusting the state pension and pension rules in general included: volatility of government and mistrust in politicians, the uncertainty of Brexit and broken promises about the state pension that has damaged peoples’ opinions of pensions.
Further to this, Just Group also noted that people often feel differently about pensions in general in comparison to their own pension. It was also inferred by Just that trust is result of engagement, therefore, the more people are encouraged to think about their pensions, the more likely they are to hold a neutral view towards the sector.
However, the report added that the mistrust “was typically based on perception of the sector rather than personal experience”.
Just Group group communications director Stephen Lowe said the new research reveals the complexity of the problem. “This is partly about how we as providers deal with our customers and their views on our competence, integrity and transparency.
“The environment in which we operate also affects people’s views, including: the complexity of the rules and how frequently they change; customer knowledge and engagement; the wider landscape that informs their perceptions and not least how their attitudes change over time and with age.”
In order to tackle these issues, a diverse group of industry leaders met today at Just Group’s second Retirement Leaders Annual Summit to collaborate on ideas that could help rebuild consumer confidence for the future.
Just noted that the theme of its summit was prompted by the Financial Conduct Authority’s research last year that revealed that thousands of people were withdrawing their pension funds early and moving the money to bank accounts as a result of their mistrust in pensions.
“That was a wake-up call. It questions our very purpose – to help people prepare for the future – and we can’t achieve that without the trust of our customers,” Lowe explained.
“While the FCA report identified mistrust as a problem, it didn’t explore what lay at its root or what could be done to address the trust gap. So, we commissioned new research that will set the scene for today which is aimed at encouraging collaboration across a range of stakeholders in order to find practical solutions to bridging the trust gap.”
Lowe added: “We know that when people do take a closer interest in their own pension they feel quite differently about it compared to the pension sector more broadly, so the more we can get people engaged the more likely they are to be positive.
“This is an ambitious project that has the involvement of some of the sharpest minds in the industry so we are confident it will make a real difference.”