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Employee preferences in Workplace Pension selection

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Complex landscape of employee preferences, confidence and skills

Recent developments have seen the government introduce a Lifetime Provider model for workplace pensions, a move that has sparked considerable interest and debate. Findings from a recent survey reveal a striking preference among employees for their employers to take the lead in selecting their workplace pension provider.

A significant 69% of respondents favour this approach, with only 31% preferring to make the choice themselves. This preference skews even more strongly among women, with 75% opting for employer selection compared to 63% of men[1]. Furthermore, age plays a critical role in these preferences, with 85% of those aged 55 and above preferring their employer to choose, highlighting a generational divide in attitudes towards pension provision.

Confidence and skills in pension selection

The research also sheds light on employees’ confidence levels in selecting a pension provider, with 55% expressing minimal confidence in their ability to choose effectively. This lack of confidence contrasts sharply with the 19% who feel extremely or quite confident in making such decisions. Notably, men are more likely to feel confident (26%) than women (10%), underscoring a gender gap in confidence levels.

When it comes to the skills and knowledge needed to compare and select the right workplace pension scheme, only 37% believe they possess the necessary skills, while 31% feel they do not. This gap in self-assessed proficiency is particularly pronounced between genders and across age groups, with younger savers more likely to express confidence in their abilities.

Importance of employer support in pension provision

These findings underscore the critical role that employer support plays in guiding employees towards high-quality pension provision. The data reveals not just a preference for employer-led selection but also highlights significant disparities in confidence and understanding of pension schemes across different demographics.

As the sector explores the implications of the Lifetime Provider model, it’s essential to address these disparities to ensure all savers receive the support they need to achieve positive retirement outcomes. This is especially pertinent for those who prefer not to choose their own provider and those who may overestimate their ability to make informed decisions.

Navigating the future of workplace pensions

The research highlights the complex landscape of employee preferences, confidence and skills regarding workplace pension selection. As we move forward with the Lifetime Provider model, employers, policymakers and the pensions industry will need to work together to address the needs and concerns of all savers.

Ensuring that employees have access to high-quality pension schemes supported by their employers will be key to delivering positive retirement outcomes for the UK workforce.

Source data:
[1] Research conducted on behalf of the PLSA by Yonder Consulting from 13/12/23 to 14/12/23 with an overall sample size of 1631 non-retired adults, of which 568 were in employment saving for a DC workplace pension.

THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.

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