Up for grabs? Public attitudes on the pensions ‘pot-for-life’ proposal

SUMMARY

• Among various issues in the UK pensions market, there is a deluge of small pots created as people move between jobs, as well as broader issues of adequacy and awareness.
  • Government plans to consolidate schemes will help to reduce the number of existing pots, but they will not stop new pots from being created.
• ‘Member choice’ could help stop the proliferation of small pots, and has the potential to empower savers and boost engagement.
  • Employees would tell their employers where to send their pension contributions, rather than starting anew with each career move.
• The public wants the option of member choice: our survey found that 72% of respondents are in favour of the idea.
  • Those with higher levels of educational attainment, and existing pensions engagement, are more likely to be in favour, but the measure has majority support across all demographics.
  • This is not just about convenience – people are as likely to say they are motivated by value for money as consolidating pensions.
  • Concerns that member choice will undermine the role of employers in supporting their workers may be overstated: 48% would not miss the pensions information they get through their employer, and an additional 22% don’t even receive any as it is.
• However, most people want the option of choice rather than wanting to actually exercise that right
  • Only 28% of survey respondents said they would actually use member choice and choose a different pension provider than their employer’s.
• Member choice might prompt some increased engagement, but we should not expect too much
  • 63% of respondents said member choice would make them engage more with their pension, and 41% thought they would increase their contributions.
  • However, 67% like their employer handling their pension for them, and 48% do not think they need to actively manage their pension.