The role of pension provision is likely to diminish as consumers demand more flexibility and a broader range of benefits, and employers demand more immediate engagement in benefit spend, corporate advisers are warning.
During a panel debate at the Corporate Adviser Summit in Hampshire last week, advisers highlighted the growing trend among consumers, particularly the younger generation, to have more access over their finances in a way that traditional pension offerings do not allow.
Damian Stancombe, director of P-Solve, says attitudes toward saving and spending into today’s culture have changed people’s view of pensions unalterably.
“Pensions as part of remuneration will become less important as the decade progresses. If I was in business and I want reward spend it is not on a pension, it’s on the here-and-now and there are a lot more products that are here-and-now focussed, compared to pension,” he says.
Dick Stratton, partner at Mercer, agreed, arguing that consumers are becoming more savvy about their finances in general, not just their pensions.
“Pensions will become a less important part of the overall savings continuum. It will be more about young people saving in share plans, diversifying and then maybe putting into Isas and pensions, maybe, in due course.”
Andy Marchant, corporate managing director at Aegon Scottish Equitable, said there are contrary forces at play when it comes to workplace offerings.
“I think pensions will remain a core part of what is offered in the workplace but they won’t be the only part and, particularly for larger employers, will form part of a more complicated range of benefits but a lot of that will depend on tax arrangements.”
But Joel Adams, joint chief executive of Lift-Financial, says he envisages an increase in the role of pensions, with retirement products becoming more central going forwards due to consumers wishing to avoid state dependence in old age.
“The level of public engagement in pensions is likely to grow and I think pensions are going to firmly stay on the agenda for everybody and are likely to become more important as people start to realise how important it is to look after themselves later on because quite clearly the state isn’t going to do it.”