New research released by Hymans Robertson and employee engagement organisation Like Minds on defined benefits (DB) pensions has revealed workers lack confidence about making informed decisions at retirement, with more wanting greater levels of employer support.
The study – which specifically focused on DB pensions members over the age of 55 – found that just 27% of those polled said they felt confident about knowing what do with their pots as they approached retirement age.
According to the research, more than a third did not feel knowledgeable about their current DB pension arrangement, and nearly half (47%) said they wanted more support about the options available to them in the run-up to exiting employment. Only one in five said the level of information they currently received was adequate.
The resulting report, Protecting DB pensions, concluded there was lack of clear and appropriate communication available to staff. It said: “The truth is that a lot of DB communication (and we use that word advisedly rather than engagement), has been driven by a requirement to communicate rather than the communications actually being driven by member needs.”
It added: “Prevention is always better than cure. Proactively helping members understand what they have, its value and embedding support and guidance into the engagement process will protect members better.”
Other findings of the research included the fact that 36% of respondents said they did not have guidance on what options there were available to them. This was a worry, claimed the report, as it meant there was a second problem – fear from DB members that their lack of knowledge could make them more susceptible to scams.
The research found 4 in 10 (39%) admitted they would put themselves at risk by unknowingly engaging with a common scam tactic, such as being told they had to respond to a time-limited offer or that there was a guaranteed high return on their savings.
Commenting on the research Ryan Markham, head of member options at Hymans Robertson, said: “It is vital trustees and employers consider their member engagement and support strategy. They have a moral responsibility to step up and ensure that their engagement strategy is fit for purpose and has actually thought through what members really need to make well informed and life changing decisions.”
Nick Throp, director at Like Minds, added: “The truth is that a lot of DB pensions communication has been driven by a requirement to communicate rather than being truly member-centric.”
He said: “Many DB pension schemes are still stuck in the digital dark ages. Covid-19 (Coronavirus), has highlighted this DB digital deficit even more. Proactively helping members understand what they have, its value and embedding support and guidance into the engagement process will protect members better.”