The national employment savings trust (Nest) is viewed as largely irrelevant as most of the larger employers plan to rely on existing arrangements to cope with the 2012 pension reforms.
This according to joint research from the Pensions Management Institute (PMI) and Standard Life called DC Pulse, an in-depth study of attitudes, consumer engagement and choice around defined contribution (DC) pensions in the UK.
The survey was conducted between May and June 2010 among PMI members and received 423 respondents.
The report also highlighted that the biggest concern for defined contribution (DC) scheme sponsors is the distraction caused by the defined benefit (DB) legacy which is taking time and resources away from effective DC implementation.
Other key issues include: the substantial gap that exists between eligibility to join a workforce DC scheme and the actual take up; the general downward trend in the number of funds offered by DC schemes with a range of 2-10 funds emerging as the preferred option; and a widespread consensus amongs employers that employees should start to take an increasing responsibility for educating and informing themselves about financial matters.
Vince Linnane, chief executive at PMI, said: “It is now very clear that DC pensions are the way forward. We therefore felt it was vital to explore the big issues around engagement, plan structure, pensions reform and governance.
“The views of over 420 PMI members, plus a cross-industry roundtable discussion that conducted an initial review of the findings, left us in no doubt that there is still a huge communications exercise required before people grasp the complexities and choices of DC pensions.
“It is particularly noteworthy that 81% of those surveyed felt it was important or very important to provide good financial education to employees to allow them to make better informed decisions.
“It is interesting to note that there is a growing emphasis on encouraging long-term saving in general rather than on pension provision in particular, and this is reflected in the growth of corporate wraps offering employees access to a wide range of savings options.”
Ian Buchan, senior business development manager at Standard Life, added: “Employer-sponsored pension provision will continue to evolve as the dust settles on DB legacies. Employers are looking to improve the quick-fix solutions put in place around the closure of DB and reconstruct DC schemes to ensure they provide relevant and fit for purpose benefits for employees. The looming pension reform agenda will also provide a catalyst for change.”
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