‘Good returns’ are considered the top attribute of DC pensions while charges are not front of mind, a survey of 15,000 members has found.
The survey, conducted for independence governance committees (IGCs) across members of 11 contract-based providers, found controls and safeguards, employers matching contributions and a reputable, financially-strong provider were the other top four attributes employees wanted from a DC provider.
A requirement that charges be in line with the market average was the thirteenth most cited attribute out of a total of 23 attributes considered important to DC savers, below ‘having an easy way to change the amount paid in’, ‘access to a range of funds’ and ‘accurate administration and reporting’.
The research also found a low awareness of key features of pensions, with only 40 per cent believing they use a default fund.
The research was co-ordinated by Sackers and carried out by NMG Consulting. Aegon, Aviva, Fidelity International, Legal & General, Old Mutual Wealth, Prudential, Royal London, Scottish Widows, Standard Life, Virgin Money and Zurich all participated in the research.
Sackers associate director Jacqui Reid says: “The research has led the group to conclude that education and ongoing support is vital for increased awareness and to create a greater sense of empowerment in members. There is a great deal of willingness to engage if misconceptions can be peeled away and gaps in learning filled. Members are also more likely to engage and consider saving more, producing better outcomes, if they are more confident about the security of their pension.
“Improved perception of value for money by members will be achieved through more effective delivery of the key attributes. As ever, the challenge is engagement and this requires ongoing education and communication, which will need to be tailored, through personalisation and appropriate channelling of information and support, whether it be web, mobile app, letter or some other means, to be effective.”
Aegon pensions director Steven Cameron says: “Gone are the days when any industry, pensions or otherwise, can assume it knows what its customers value, and collecting views from 15,000 members has offered up important, fresh insights for IGCs and providers.
“Our IGC has developed value for money principles that go beyond a narrow focus on charges and it’s reassuring to find that those members surveyed also value a range of attributes, with charges actually not appearing in the ‘top 10’.
“The importance those surveyed placed on ‘security’ of their pensions chimes with Aegon’s own research. Recent high profile problems with defined benefit pension schemes such as BHS may have created a general sense of unease. We need to do more to highlight the strong protections members of defined contribution workplace pensions offered by regulated providers already benefit from. As we seek to encourage member engagement, it’s important we communicate to members of such schemes that the contributions they and their employer are making are held safely to provide for them in their retirement.”