Over a third of adults mistrust pensions

Pardon the Interruption

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Trust in pensions is very low, and has suffered further during the pandemic, a new survey has found, pointing out the negative effect of this on saving levels. 
 
More than a third of people surveyed (34.3%) had no or very little trust in the pensions industry, while only just over a quarter said they trusted pensions a reasonable amount or a lot. The Covid-19 pandemic has slightly accentuated this: lack of trust rose to 35.0% after the outbreak of the disease. 
 
Source: Trafalgar House
 
Pensions administrator Trafalgar House, which commissioned the survey of over 2,000 people from YouGov in February and September last year, said that having asked all respondents to score their level of trust in the pensions industry on a numbered scale of 0-10 that gauged responses from ‘not at all’ through to ‘a lot’, the average 2020 Trust Score for pensions of 4.56. Trafalgar House plans to publish a new index annually to assess trust and confidence in pensions.  
 
Of those surveyed, three in 10 (29.6%) said their lack of trust impacts their savings level, while more than seven in 10 (71.2%) feel they have less than they need in retirement. Only 20.6% said they think they have about the right amount. 
 
In contrast, people have more trust in their own choices for where pots are held (56.1%), investments (55.3%), the amount they have saved (49.5%) and the level of charges (44.8%), according to the survey. 
 
“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,” said Daniel Taylor, client director at Trafalgar House. 
 
“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.” 
 
Asked what would help improve their trust, respondents saw accuracy (92.5%), speed (90.1%) and clarity (89.8%) as the most important factors for building their trust when receiving information from the pensions industry. These were followed by access to a self-service website (77.0%), and more than half (58.2%) rated a pensions mobile app as fairly or very important. 
 
Source: Trafalgar House
 
Pensions did not fare too badly in trust terms compared with other financial services, however, showing perhaps how low overall confidence in the finance industry is. 
 
Comparing pensions with eight other industries, people only trusted three of them more: savings products, banks and accountants. The preference for savings products could explain why almost a third of those who fully withdrew their pension pot put most of it into savings products, as the Financial Conduct Authority found in its 2017 interim report of the Retirement Outcomes Review.
 
Source: FCA
 
Industries receiving an even lower trust rating than pensions were lawyers, credit cards, insurers, estate agents and loan providers. 
 
What can the industry and government do to increase trust in pensions? 

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