Industry ups member support as impact of CofL crisis shows

Industry organisations are increasing support for members as the "first signs of the cost-of-living crisis" show in pensions, with research revealing that 19 per cent of schemes have had savers ask about reducing or stopping pension contributions .

The research from the Pensions and Lifetime Savings Association (PLSA) found that a further 17 per cent of schemes had seen savers wanting early access to their pension after age 55, while just 28 per cent had seen no changes in saver behaviour in the past few months.

However, the PLSA noted that there were some more positive findings, as only 12 per cent of 112 schemes surveyed have seen members wanting to opt-out, which the association noted is “only a little” above the long-term trend of 9 per cent.

Furthermore, while savers haven’t tended to make changes to their contribution rates, around one in five (19 per cent) schemes surveyed reported an increase in members seeking help and guidance on financial management.

However, almost half of schemes (45 per cent) expect more savers to reduce pension contributions in the next six months, while just over a third (34 per cent) are expecting an increase in members wanting early access to their pension after age 55.

Action is being taken by the industry though, as the survey found that over a third (35 per cent) of PLSA members have put special measures in place to support their members during the cost-of-living crisis, while 28 per cent are planning to do so.

In particular, 68 per cent of providers have already signposted advice or guidance on managing debt and financial wellbeing to their members, while 55 per cent have signposted information on pension planning, and 52 per cent put information of the risk of pension scams in place.

Around a third (36 per cent) have signposted information on automatic enrolment, meanwhile, and nearly three in ten (29 per cent) have signposted support/guidance on transfers.

The PLSA will also be looking to provide support, with its pension schemes best practice guidance on communicating issues on the cost of living to be published “in the coming weeks”.

PLSA director of policy & advocacy, Nigel Peaple, commented: “As the cost-of-living crisis continues to pose challenges for many people up and down the country, we are seeing the first signs of this manifesting itself regarding workplace pensions.

“Our survey shows opt-out rates remain low and that most people are choosing to maintain their pension contributions with the related benefits from employer contributions and tax relief.

“However, the cost-of-living crisis will affect each household differently, so it is not surprising that some people have been asking about accessing their pension early, once they are over 55 years of age, and that schemes believe some savers will reduce their pension contributions over the next six months.

“Many schemes are working hard to provide information and guidance that will signpost the options savers have regarding pensions. We hope this will support people in making well informed decisions.”

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