- Trafalgar House’s new annual Index will assess trust and confidence in pensions
- Respondents give pensions industry a Trust Score of 4.46 out of 10
- Three in ten (29.6%) say their lack of trust impacts their savings level
- Over seven in ten (71.2%) feel they have less than they need in retirement
Trafalgar House, the pensions administration specialist, has today announced the release of its inaugural Trust & Confidence Index for the pensions industry. The index reveals the first public Trust Score for pensions as just 4.46 out of 10.
The Index, which takes the views of over 4,000 people, provides an annual benchmark of the public’s level of trust and confidence in the pensions industry. The Index also compares how the pensions sector fares against other financial services, the factors that impact the level of trust people have and which service areas they consider important. The analysis also asks important questions about people’s own views about their retirement decisions and plans.
The findings of the Index show disappointing results, with over a third (34.3%) of people saying they have no trust or very little trust in the pensions industry - while only a quarter (26.7%) said they trusted the industry a reasonable amount or a lot. Even more concerning is that three in ten (29.6%) of respondents said their lack of trust in the industry had a negative impact on the level of savings they had built up.
Daniel Taylor, Client Director at Trafalgar House, commented:
“Trust must not be assumed, it must be earned. It should develop over years of consistent delivery on promises and providing valuable support and advice, not through an expected confidence that the industry knows what it is doing. We often talk about engaging with members to promote greater levels of saving, but if they lack trust in us, there will be an impenetrable barrier that will stop any engagement message getting through.
“Our research raises a red flag for the industry. People have cited their lack of trust as negatively impacting their approach to saving – a fact so important, the industry needs to stand up and take notice. Pensions needs to perform for a modern member with a service fit for 2020 and beyond - and do so in a transparent and encouraging way that lets members know we all have their best interests at heart.”
Elsewhere in the Index, when it came to members’ feelings towards their own decisions scores were notably higher. Confidence that they have made the right choices for where pots are held (56.1%), investments (55.3%), amount they have saved (49.5%) and the level of charges (44.8%), all suggest that members feel more confident in the role they play in their retirement planning.
However, when it come to the fundamental question of whether they felt they had enough to be comfortable in retirement, a substantial 71.2% of respondents said they had slightly or much less than they felt they needed. Only 8.2% believe they have more than needed, while 20.6% felt they had about the right amount.
Taylor added: “Like it or not, members’ expect their pension providers to take a great deal of responsibility for helping them build their retirement savings. Members’ have shown greater confidence in decisions they make themselves, whether that’s because of a lack of understanding of other options or simply feeling they are doing all they can reasonably afford to do. It’s clear from the research that instead of telling people how things are done, we should be asking them about what works for them and what support they need from us. Only then will we regain their trust and build their confidence in our ability as an industry to support them in retirement.”
To download a full copy of the Trust & Confidence Index 2020, click here.