People’s Partnership is the new name for B&CE, provider of The People’s Pension. Find out more

Close

Topic: Retirement saving

Plans to improve retirement options for savers welcomed

Plans to improve retirement product options for savers have been described as sensible by People’s Partnership1, which provides The People’s Pension to more than six million people across the UK,

Commenting on Government proposals to improve access to decumulation products for Defined Contribution savers2, Phil Brown, director of policy at the provider of the UK’s largest master trust

Speaking after the deadline for the consultation closed, he said: “As the typical automatic enrolment saver gets older, we think it’s crucial that the decumulation options for these workers are significantly improved.

“Although more details are required, there are real potential benefits from the proposed reforms from the Department for Work and Pensions. At face value, the evidence suggests that a strong steer towards a suitable product may improve decision making for a significant proportion of defined contribution pension savers.

“We see a framework in which people are free to take money from their defined contribution pension savings via a good quality product as a sensible plan. Automatic enrolment has been a tremendous success over the past decade, but it’s vital that these 11 million savers are able to easily access their savings when they need to.”

ENDS

Making decumulation simple, straightforward, and clear for all

Every year, around 600,000 pensions are accessed for the first time. These new retirees begin the complex process of decumulation – getting rid of the assets they’ve built up in their pension pots to maintain their standard of living. But surprisingly, before selecting how to withdraw their pension, less than half of retirees seek professional advice.[i]

The cost of advice isn’t the only issue

ABI research found that 72% of customers would not pay for financial advice for various reasons. The first and most significant issue is the cost of regular advice and the absence of other choices. According to ABI polls, nearly half of those surveyed (46%)[ii] prefer one-off advice if it were easily available, while just 12% prefer continuous advice.

However, money is not the only concern. Pension Wise offers free guidance, but data suggests that just 14%[iii] to 22%[iv] of those retiring use it before accessing their money.

Participants in our five-year longitudinal study, ‘New Choices, Big Decisions’, told Ignition House researchers that retirement had become ‘scary’ to contemplate. They don’t seek advice because they believe pensions are too complicated for them to grasp, or because they are naturally concerned about the sustainability of their investments.

The pitfalls of no advice

More than half (53%) of individuals who accessed their pension savings in the previous 5 years claimed their 25% tax-free lump amount.[ii] According to our findings, individuals are making these and similar decisions without considering the implications. Participants told us that taking the cash was the easy decision because it was tax-free, that they considered the lump sum as a mid-life “bonus,” or that they “simply didn’t think too much about it.” 

Many people didn’t see their option as a retirement income decision, and many are unaware of the consequences of decumulating into cash. They may be unaware of the possible effect on their long-term earnings.

Shifting from automatic to manual

During the accumulation stage, the majority will be invested in a scheme default fund or glidepath, so they don’t have to think too hard about it.

In comparison, once they reach retirement, people have the more difficult task of converting a pot of cash into an income. Our research shows that many people make pension decisions without adequate thinking or comprehension and without advice.

We trust individuals to be risk managers, actuaries, and investment gurus, and you’ll probably need to be a little bit of everything to produce a decent outcome. We, as an industry, place unrealistic expectations on individuals to make complex decisions for themselves.

FCA solutions fail to address all the issues

The Financial Conduct Authority’s (FCA’s) recent retirement outcomes review provided a thorough examination of the issues that people confront when collecting a retirement income, but the remedies presented did not adequately address the issues raised.

Consider investment pathways. They can help individuals from mistakenly decumulating into cash when they use flexi-access drawdown. However, they don’t address the other significant risks. These include:

  • Withdrawing too quickly and running out of money
  • or withdrawing too slowly and not enjoying the retirement they had planned.

Pathways, therefore, aren’t a sound strategy for decumulation in occupational pensions.

Customisable, simple, and easy to compare

Most individuals want pensions that don’t require them to have financial skills to work successfully. Affordable, clear decumulation products that keep people invested for growth in their early retirement years while providing greater assurance as time passes. These pensions must be customisable while being simple to maintain on their own and easy to compare with other pensions available.

The government’s strategy to increase the number of pension savers has proved enormously effective. The industry’s focus must now be on providing pensions and services that assist people in achieving the sustainable retirement they deserve. Positive pension outcomes should not be limited to those who can afford guidance; they should be accessible to everyone.

[i] https://peoplespartnership.co.uk/downloads/supporting-customer-decisions-about-pension-withdrawals/

[ii] https://peoplespartnership.co.uk/downloads/supporting-customer-decisions-about-pension-withdrawals/

[iii] https://peoplespartnership.co.uk/downloads/supporting-customer-decisions-about-pension-withdrawals/

[iv] https://peoplespartnership.co.uk/downloads/supporting-customer-decisions-about-pension-withdrawals/

[ii] https://peoplespartnership.co.uk/downloads/supporting-customer-decisions-about-pension-withdrawals/

information

This article was written when we were B&CE, before we changed our name to People’s Partnership in November 2022.

Pension savers need more support from the industry before making big decisions

Older retirement savers need far more support from the pensions industry before making the “huge” decision about how to best use their savings pots, according to B&CE1, provider of The People’s Pension.

Speaking at the PLSA Annual Conference in Liverpool, Phil Brown, Director of Policy at B&CE, which supplies pensions to nearly six million people or 1 in 5 UK workers, said that current decumulation options favoured by pension companies meant that millions of ordinary workers were faced with complex decisions that many aren’t qualified to make.

He said that the unique longitudinal study, ‘New Choices, Big Decisions’2, that The People’s Pension first commissioned following the introduction of Pensions Freedoms in 20153, should be seen by the industry as evidence from which it can offer consumers alternative retirement solutions, such as pseudo-default retirement products.

He also challenged the industry to do more to help consumers not only make decisions on how to make their Defined Contribution savings last throughout retirement, but also to provide clearer details, so they are better informed before transferring their pension pots.

Mr Brown says: “After buying a home, how to use their defined contribution pension savings is the biggest decision many people will make – it’s huge. Through automatic enrolment we hold people’s hands and put them in pensions when they join companies, but then assume that they will be super engaged and make complex retirement choices that will impact their retirement for 30 or more years.

“The reality is that to make informed retirement choices, consumers need to be part financial adviser, part fund manager, part economist, part tax accountant, part doctor and maybe part futurologist. When somebody buys a house, we don’t expect them to do the property conveyancing, yet when it comes to what to do with their pension pots, we expect them to navigate an even more complicated area, despite not being equipped with the rights skills.

“Our ‘New Choices, Big Decisions’ research showed that many savers run out of money in retirement because they don’t understand either their own longevity or the impact inflation has on those savings.”   

He has also called for pensions dashboards, which are due to be introduced in 2023, to display a scheme’s value for money credentials at the earliest opportunity.

He said: “The pensions transfers market is creating member detriment as members are, in some cases, using the wrong sort of information to make transfer decisions. It’s crucial that savers are aware of the impact of charges when brand or other factors are the main driver behind a transfer. We need to change the discussion to one about ‘Value for Money’ and dashboards must display this information as soon as possible to prevent poor decision making that is detrimental to member’s retirement outcomes.”

ENDS

Is auto-enrolment ensuring an adequate retirement for everyone?

Overall, we’re in a considerably better position than we would have been had auto-enrolment not been implemented. However, problems persist, particularly for Generation X and millennials.

Forecasting the required income and attainable lifestyle

With the help of analysis from the Pensions Policy Institute, we examined existing pension savings for thousands of people and utilised the data to generate realistic pension forecasts1 for everyone at state pension age. The anticipated retirement earnings were then compared to broadly recognised definitions1 of an appropriate retirement income. As our benchmarks, we used the Pensions Commission’s target replacement rates2 and the PLSA’s retirement living standards.3 The replacement rates represent the expected proportion of work income required in retirement, whereas the PLSA standards estimate the lifestyle you may afford with a certain income.

A baseload retirement income

Policymakers understood from the start of auto-enrolment that saving 8% of band earnings and the state pension would not provide a suitable retirement income.2 This is supported by our research. Auto-enrolment is performing as planned, providing the millennial group with a baseload retirement income that falls short of the primary adequacy measures previously mentioned.

It’s hardly surprising that our research reveals that just 27% of millennial households are on course to meet their target replacement rate – two thirds of a typical median earner’s pre-retirement income. Retirement income projections for millennials are lower than those for Generation X and baby boomers, but millennials have more time to save if they wish to or if auto-enrolment is reformed.

The outlook for baby boomers and Generation X

The situation is different for baby boomers and for Generation X. Both groups’ projected retirement earnings are, on average, higher than millennials’.

Far more baby boomers are on course to earn an adequate retirement income, but headline figures mask the disparity. According to our findings, 60% are on track to meet their target replacement rate. This is mostly owing to the presence of defined benefit (DB) pensions, typically extremely large DB pensions, which are less prevalent in other generations. The outcomes are predictably worse for individuals of the boomer generation who did not have access to workplace savings during their working life. For these people, auto-enrolment has arrived too late. It means they won’t rely only on the state pension, but it likely won’t get them close to an adequate income.

Meanwhile, Generation X is in difficulty, with our research showing 35% of households on course to hit their target replacement rate, according to our research. While Generation X’s projected retirement incomes are larger on average than those of millennials, many more are significantly below the Pensions Commission’s target replacement rate. They most likely do not have enough time to make up lost ground because they did not save enough previously. The research substantially confirms the notion that Generation X has been stuck between the elimination of DB and the implementation of auto-enrolment.

The argument in favour of increased contributions will have to wait

So, what next? It’s obvious that with inflation high and a deep recession forecast, no one should be contemplating increases in statutory minimum contributions in the short term. Realistically, we are looking at a pause until economic normality returns. If there is a case for higher contributions, it’s going to have to wait. The pension sector should use this pause to  engage with policymakers, discuss next steps, and build a consensus that runs wider than the pension industry. 

Setting explicit goals for the pension system

We also believe it is crucial that policymakers and stakeholders agree on a set of objectives for what the pension system is meant to accomplish before recommending a solution to the issues we’ve highlighted. The Pensions Commission of 2005 contended that the system, which consists of a reformed state pension and auto-enrolment, purposely delivers results below the adequacy threshold for the majority of people.2 And that is what the policy is currently designed to deliver.

We don’t think there is much mileage in pointing out that higher contributions will deliver higher retirement incomes without gaining a consensus on what the pension system as a whole should be trying to achieve. Setting objectives for the system would enable a debate about what the right level of saving is for different groups, we should be explicit about what level of income the pension system should target for the average individual. That should enable a much more constructive debate about whether we are getting auto-enrolment right.

information

This article was written when we were B&CE, before we changed our name to People’s Partnership in November 2022.

Will pension savings be adequate for retirement?

The figures speak for themselves

Since 2012, 10.6m employees have enrolled in a workplace scheme, with an additional total of £28.5bn saved into UK pension pots each year.* But there remains the question of whether the average auto-enrolled member is saving enough for their retirement.

In its 2005 review, the Pensions Commission was clear that at least 16% of qualifying earnings – double the current minimum contribution – would be required to provide an adequate retirement income, with half expected to come from a workplace pension and the other half from additional voluntary saving.**

A ‘basic’ or ‘comfortable’ retirement?

But new research shows this hasn’t happened. Our report, Pension Adequacy: A Pension Saver’s Perspective,*** finds that most auto-enrolled pension savers and employers are anchored to the minimum rate, with most savers wrongly believing that they are on track for a ‘moderate’ or ‘comfortable’ standard of retirement living, based on the PLSA Retirement Living Standards. Just 7% of savers are aware that the current minimum contribution will only provide a ‘basic’ retirement income, and worryingly, 4 in 10 people believe that because the contribution rates have been set by the government, they are saving enough.

Additionally, the idea of additional voluntary saving is far from reality; almost half (43%) of all savers haven’t considered paying more into their pension, almost half (46%) don’t know they’re allowed to pay in more than the minimum, and two-thirds (64%) of people have less than £10,000 in additional savings.

If you accept the idea that contribution levels should be increased to prevent poor saver outcomes, questions remain:

  • How much should this increase be?
  • Who should bear the burden?
  • How do we encourage people to pay more if they can afford to?
  • Should it be made easier for them to pay more as they get older?

With many savers not knowing they’re allowed to increase their contributions or how to pay more in, our research is clear that more can be done to help savers understand the options open to them.

What needs to be done for a positive saver outcome?

There’s a growing consensus across the pension industry that an increase in contributions is required to lead to positive saver outcomes. But with so many questions around how this could or should be done, we’re calling on the government to set out plans for a review of the minimum contributions required for auto-enrolment.  We’re also asking them to outline a timeline for implementing the recommendations of the 2017 automatic enrolment review once economic circumstances allow.

While millions of people are rightly concerned about the increasing cost of living, a very real problem is building up for millions in their retirement and it is crucial that the government comes up with a plan to tackle this.

The deeply troubling findings of this research reveal that millions of hardworking people are simply not saving enough for their retirement. While affordability obviously plays a role in this, the research shows that in most cases, people believe that because they’re saving what they’ve been told to by those who run the country, they’re saving enough. While auto-enrolment has had a truly successful first decade, government must now plan ahead to ensure that over the next 10 years, auto-enrolment members are saving enough to provide for a comfortable retirement.

It’s clear that some need to save more for their retirement and the government needs to act to ensure that the minimum contribution level helps them do this. This is something that must be addressed to ensure the continuing success of auto-enrolment.

*Department for Work and Pensions figures (2021)

**Pensions Commission (2005)

*** Pension Adequacy: A Pension Saver’s Perspective report, prepared by Ignition House and published by B&CE in March 2022.

information

This article was written when we were B&CE, before we changed our name to People’s Partnership in November 2022.

Pandemic has helped workers to save more – latest research

Nearly three in 10 people (29 per cent) have been able to save more money since the beginning of COVID-19, and latest research shows how the pandemic has impacted people differently depending on what jobs they have.


A YouGov survey, conducted on behalf of The People’s Pension1, shows that more than a third (37%) of those described as ABC1s, who tend to occupy managerial and supervisory positions, have been able to save more since March 2020, compared to 20% of C2DE workers, who are typically in manual and lower paid jobs2. The regions where the highest proportion of people said they were able to save more include; Yorkshire and the Humber (36%), East Midlands (35%), South East (35%) and Wales (33%). Whereas the regions least likely to have saved more are: North East (20%), Northern Ireland (22%), North West (23%) and South West (24%).


The poll also shows that 1 in 20 UK adults (5% ) have increased the amount they save into their pension since the beginning of the pandemic (March 2020) with 6% of ABC1s achieving this, compared to 3% C2DEs.


The survey of 2,163 adults , conducted as furlough came to an end, shows that since the pandemic began:
• 2% have been left out of work
• 9% say they have earned significantly less
• Two thirds of pension savers (67% haven’t felt the need to engage with their pension
• 3% withdrew money from their pensions

The survey follows recent figures from the Department for Work and Pensions3 that show that overall saving into UK workplace pensions in 2020 rose by £5.5bn to £105.9bn.


Phil Brown, director of policy and external affairs at B&CE, provider of The People’s Pension, said: “This research confirms that the economic fallout from the pandemic has impacted people differently, depending on how much they earn and where they live. It’s very interesting to see that nearly three in 10 adults (29%) have been able to save money due to the fact they have spent a lot less on holidays and going out.


“The results of our survey also reinforce the importance of saving into a pension, something that people have continued to do during a time of great economic uncertainty.”


ENDS

Why a pension statement season might negatively impact engagement with savers

Encouraging more people to engage with their pensions is something everybody in the industry should agree with and we very much welcome initiatives which will help improve this.

It’s been known for some time that a pension statement season – when all providers would be compelled to send out statements during the same narrow window – was being discussed within the Department of Work and Pensions. Now, following the Pensions Minister’s recent address during the Pensions and Lifetime Savings Association conference, we know that this is an idea which could become a reality.

It’s widely known that many people don’t usually read their pension statements. Schemes send them and too often they languish unread. There’s little point in the simplified statements, which will be introduced in a year’s time, especially if they get sent out and are unread like previous communications. Policymakers are of the belief that a pension statement season will prompt more people to engage with their pensions but there are genuine concerns within the industry that any such policy might lead to unintended consequences.

Questions to be answered

Those of us charged with delivering such a significant change have questions about how it would really work and what the impacts of a statement season would be on savers.

As the biggest independent master trust in the UK, The People’s Pension has 5.4 million members. If we were to send out statements to all our members during a month, that would be 180,000 statements posted a day. It costs roughly £1 per paper statement, a figure that doesn’t vary much between providers. So, if the government mandates paper statements it could cause additional costs, which may be passed to pension savers through charges.

Then there’s the likely impact on customer service teams, rather like the one I oversee. Currently we phase sending out statements due to the increase in contact from customers after they’ve received them as, often, the notification of a statement acts as a trigger to transact with us.

We expect that a statement season will concentrate all the customer contacts into a short window. This could lead to a saver’s first engagement with their pension provider being a negative one as they may have to wait for an unacceptable period or be unable to get through.

There’s often an assumption that you can just scale up and scale down these operations to meet demand, but sadly that’s not how it works. We’re administering people’s life savings and you need to be able to trust the people you have doing that. Trust means training, knowledge, skills and expertise and that takes time. There isn’t a pool of people out there you can just draw on at short notice to fill gaps in your operation – especially if every other pension provider has the same problem.

Potential for saver frustration

It’s likely that the main impact of a statement season will be saver frustration. There also won’t be a major lift in engagement when measured over the course of a year – at least not for some time. Concentrating engagement into a short period will overload contact centres and degrade the experience people have talking to their pension provider.

People contact us for a variety of reasons; some to see how their savings are doing, while others ring up because they are dealing with the death of a family member or because they need quick access to their savings. It’s people like this we’re especially worried about as an overloaded call centre could prevent them from getting through when they need support the most.

We understand the intention behind this proposal, but we remain concerned that the government’s plan to improve engagement will result in frustration rather than meaningful engagement.

information

This article was written when we were B&CE, before we changed our name to People’s Partnership in November 2022.

Our role in helping savers fund their future

We revisit our ‘New choices, Big decisions Pension Personalities’ research and the savers most at risk if we don’t find simple ways of communicating the complexities of retirement options to them.

A great success, but what now?

Next year marks the 10-year anniversary of auto-enrolment (AE). It’s been a resounding success, having helped more than 10 million people to start saving for retirement.

But more than 6 years after the introduction of pension freedoms, significant concerns linger about how to ensure savers make wise retirement choices.

Given the success of auto-enrolment was based on inertia, it would seem odd that the pensions industry would assume all savers should suddenly understand the complexities of retirement options and take control of their retirement planning.

It’s alarming to see how many savers are sleepwalking into retirement. To avoid poor saver outcomes, what’s needed are simple, good quality products that meet AE savers’ needs – built to provide a sustainable income to last their whole retirement. These factors combined should further support and help them to avoid making ill-advised decisions.

New choices, Big decisions

In our quest to make pensions work for everyone, our New Choices, Big Decisions Pension Personalities Revisited research showcases the challenges faced and decisions made by many approaching retirement.

We’ve followed a group of people since pension freedoms threw the shackles off how they can take their pensions savings and found they divided into 7 subgroups, with distinct characteristics. We’ve given these subgroups personas. Let’s consider a few that concern us the most.

Leave it Larry and Linda

Are so overwhelmed by the complexity of pensions information that, recently, they’ve decided to leave their pension savings untouched. Their savings were ‘out of sight, out of mind’ unless a life event – typically illness or redundancy – changed their plans. Lacking information, they’ve not made any decisions about their pensions for now.

Spend it Simon and Sally

They were initially pleased to take their 25% tax-free cash to spend on holidays, home improvements, or new cars but haven’t planned how to manage their pension pot. Instead, they’ve just rolled it over with their pension provider into a drawdown product and withdrawn lump sums when required. This group are unaware of investment risks and their own likely longevity. Our estimates suggest that around 3 in 4 of this group will likely exhaust their pension savings before they die.

Risky business

Decisions are difficult for savers. The here and now is easy to understand, whilst years into the future are hard to imagine.

Lack of understanding could lead people into making short-term decisions that have them:

  • jeopardise their long-term financial wellbeing
  • lose potential returns
  • pay extra tax
  • cease pension payments
  • or get scammed.

Thanks to our personas research, we’re asking the questions: ‘Are we doing enough?’ and ‘What can we do differently for our 5 million plus members?’

Recently, we presented our ‘A journey not a destination’ webinar, which looks at the findings of our ‘New Choices, Big Decisions’ research in detail – a recording is available via the link. It’s essential viewing to help everyone understand how savers approach retirement. We believe the findings show members need simple, good quality products to help them achieve a sustainable income which lasts throughout retirement.

The industry must help savers, many years before they’re planning to retire, realise it’s not a future that can fund itself.

information

This article was written when we were B&CE, before we changed our name to People’s Partnership in November 2022.

Retirement poll reveals desire for trusted guidance

Survey reveals that pension savers want trusted guidance to help them secure a good retirement

Three quarters (75 per cent) of UK adults who have a pension say that they would consider taking guidance about how to make their savings last throughout retirement from a pension provider with a legal duty to put their interests first, a new survey has revealed.

The YouGov1 survey was commissioned by leading workplace pension provider The People’s Pension2, following the publication of the ground-breaking New Choices Big Decisions3 report earlier this year, which, based on extensive interviews, found that many older savers are sleepwalking into retirement and run the risk of running out of pension savings years before they die. This study was first launched following the introduction of pension freedoms4, which has meant that individuals either must make a choice between a variety of financial products to finance their retirement or withdraw their pension savings.

The survey presented respondents with a selection of options for spending their pension savings during retirement. It found that nearly four in ten (37 per cent) of those who are saving for retirement would be prepared to be guided towards taking a pension that was split between giving them a guaranteed regular income (an annuity) and the rest as a flexible income pot (drawdown) after taking the tax-free lump sum up-front. A further 35 per cent chose a guaranteed regular income (an annuity) only option after taking the tax-free lump sum.

The survey also highlighted how unprepared for retirement planning many people are:

  • More than a third (35 per cent) don’t know when they will retire. For those aged 55 and over, more than a fifth (22 per cent) are uncertain of when they will stop working.
  • Just over one in ten (12 per cent) knew or guessed the weekly value of the UK State Pension5. This knowledge is as low as three per cent for 18-24 year olds and is only as high as 25 per cent for those aged 55 and over. 
  • Just under half (48 per cent) said they don’t know how long their retirement savings will need to last them, including 45 per cent of those aged 55 and above.
  • Nearly three in ten (28 per cent) of everyone surveyed, say they have no idea what to do with the savings they have built up for their retirement. 

Phil Brown, the director of policy and external affairs at B&CE, the provider of The People’s Pension, said: “This latest research  provides further evidence that pension savers are crying out for guidance about how they should approach retirement. It’s clear there is an opportunity for the industry and master trusts are well placed to meet it.

“Master trusts have an opportunity to develop the retirement products which will meet the needs of many for security as well as providing flexibility. This means a coming of age for well-governed auto enrolment schemes – as they move from being saving vehicles for employees to also providing their pensions in retirement.”

ENDS

How UK pensions are withstanding the fallout from coronavirus

Back in March when the world was a genuinely scary place, there was feverish speculation about what the coronavirus pandemic might mean for the pensions industry.

Both privately and publicly, fears were expressed that the economic damage wrought by the both the initial financial shock and subsequent fallout from lockdown measures might lead to a significant exodus from pensions, as financially stressed savers either ceased contributing or drew down on their retirement savings.

In the months that followed, this was a trend that we simply couldn’t see in data relating to our 5 million members. To be sure that what we were experiencing was not idiosyncratic, we commissioned YouGov to conduct a national survey of more than 2,000 UK adults.

We’ve just received the YouGov results and they’re very clear: at this stage at least, those we surveyed with a pension haven’t revised their pension saving habits much, despite the country experiencing its biggest short-term slump since records began and an accompanying rise in unemployment – the largest in 11 years.

Survey findings

According to the survey, the majority (82%) of UK retirement savers don’t appear to have made any changes to their pensions since March 2020, despite the fact just over 4 in 10 of all workers have been impacted by the coronavirus pandemic. Only a very small percentage (3%) have stopped their pension contributions altogether during the past 7 months, while just 2% said that they’ve withdrawn money from their retirement savings.

The survey also indicates that while 2% cut back on the amount of contributions they made, a further 2% have increased their contributions. Of those who took part in the survey, only a minority, 1 in 7 (14%), have even checked the value of their pensions savings since the UK went into lockdown. The same research also reveals that 45% of UK workers have been affected by coronavirus in some way, which includes being furloughed and having wages or hours reduced.

Despite recent research, conducted by a financial services company, suggesting that 1 in 4 people have either reduced or paused pension saving, the YouGov data suggests the effects of the virus on retirement plans appears to be very limited. 1% have been prompted to delay their retirement plans, while 1% of all UK adults with a pension retired earlier than they’d anticipated.

Workplace pensions aren’t of course the only type of pension in the UK and pension organisations may witness different behaviour depending on the type of category of saver for whom they cater. In particular, the experience of those organisations which primarily serve the self-employed might be different from those which cater for employees.

Support from government

Government support for the employed has been an important factor. Subsidising employment has meant that far fewer employees have been confronted with a choice between prioritising short-term needs to generate immediate replacement income over longer-term retirement needs. Subsidy also extended to pension contributions for much of the year. Some categories of the self-employed haven’t benefitted from government support and this may have had an impact.

The survey results indicate how robust the design of auto-enrolment has been. Faced by a once-in-a-century crisis, it has held up very well. Employees who were at an age where they could have withdrawn pots and crystallised nominal investment losses, didn’t do so. Employer contributions and tax relief have helped encourage people to continue to save, even in difficult times.

While the hardship for many is far from over, the early signs suggest that the British public remains steadfastly committed to saving for retirement.

information

This article was written when we were B&CE, before we changed our name to People’s Partnership in November 2022.