Research from the PLSA revealed a “nuanced landscape of awareness, preferences, and desires among savers”, showing that while 82% of savers know that their pension is invested, just 26% know in what it is invested
The pensions industry and policy makers should be mindful of savers’ preference for simple choices and low risk pensions when thinking about how to improve the UK’s approach to pensions, according to the Pensions and Lifetime Savings Association (PLSA).
Research from the PLSA revealed a “nuanced landscape of awareness, preferences, and desires among savers”, showing that while 82% of savers know that their pension is invested, just 26% know in what it is invested.
It also found that, “unsurprisingly”, many savers prefer their scheme to take the lead, with more than half (58%) preferring for their pension scheme to provide a few easy and understandable options about where their money is invested, while 26% were happy for their pension company to make all the decisions regarding their pension investments.
In contrast, just below a fifth (16%) wanted full control over their investments.
This comes after earlier research from the Pensions and Lifetime Savings Association found that over two thirds (69%) of savers believe they lack, or are unsure they have, the skills required to choose whether their pension scheme should invest.
The research also revealed savers’ preference for lower risk, as 69% of savers had a risk-adverse attitude to their pension and prioritised protection of savings over the possibility of a higher return on their funds.
Moreover, 67% of savers believe that the government should provide tax incentives to encourage pension schemes to invest in UK firms, increasing to 74% for those aged over 55.
Nevertheless, the research found that half (50%) of savers believe that the government should not tell pension providers where to invest savers money, while 24% were unsure, and 18% agreed or strongly agreed that they should.
This is also in line with industry wants, as previous research from the Pensions and Lifetime Savings Association found that the majority of UK pension schemes believe it is essential that they continue to be given complete freedom over investment decisions, provided they invest in line with members’ interests.
Commenting on the findings, Pensions and Lifetime Savings Association director of policy and advocacy, Nigel Peaple, said: Our survey provides an interesting snapshot on current saver attitudes to pension investment.
Now most people understand their pensions are invested but they do not feel they have the skills to make investment choices. Instead, they want their scheme to provide a few simple choices, Peaple said.
Peaple added: Policy makers and the pensions industry should bear this in mind as they think about how to improve the UK’s approach to pensions.