Government regulatory “tinkering” and poor communication has led to a severe lack of trust in the UK pensions industry, it has been suggested.
Speaking at the State Street Global Advisors (SSGA) defined contribution ‘happiness’ conference today, 10 October, SSGA global head of strategy Nigel Aston said that “decades of tinkering” and low industry reputation has led to a trust issue.
According to a SSGA report The Global Retirement Report: The Happiness Formula, published today, the UK scored just two out of five for trust, the second lowest out of the eight nations surveyed, beating only Italy.
Aston said: “What really does worry me is that after decades of tinkering with regulations and the with government and our industry reputation being low, I think trust is the real issue. We have the second lowest trust rating of any of these eight countries.”
The report, which surveyed over 9,500 respondents in eight countries, suggested that trust can be gained by keeping retirement plans “as simple and stable as possible” and communicating changes well in advance.
Furthermore, PensionBee head of corporate development, Claire Reilly, believes that if members can’t understand what you are saying, then they are not going to trust you.
“We only communicate in plain English, we don’t use any jargon, all our language is written by non-pensions people. Historically, the industry has had a tendency to bamboozle people with jargon and all sorts of numbers … but fundamentally, if I can’t understand what you’re saying to me then I can’t trust you,” she said.
Another factor which erodes trust of the member is the employer and Reilly argues that without member choice, this isn’t going to change.
“People should be allowed to choose their pension provider because right now your employer benefits consultant is deciding what product you should have but you bare all the risk for it and that doesn’t make any sense, so we should allow people to choose their provider … then they own it.”
The report also analysed ownership, the level that people feel they have control over their pension, and preparedness, do people believe that have “enough” for retirement.
Overall, the UK scored 2.4 out of 5, with a score of 2.3 and 3.0 for ownership and preparedness, respectively.
Commenting on the report, Aston said: “By observing retirement realities through the eyes of the individual saver, we are working to truly understand people’s experiences with state and institutional structures globally.
“By doing so, we can offer solutions that are as multidimensional as the needs of the people, plans, and policies involved. Happiness is important and evolving as our lives evolve.”