In a recent survey conducted by the Pensions and Lifetime Savings Association (PLSA), it has been found that over two-thirds of employees express a strong preference for their employers to select their workplace pension provider.
The study sheds light on the significant impact of the employer’s role in choosing the pension provider, especially in the context of the proposed Lifetime Provider model by the government.
The findings reveal that 69 percent of respondents would rather have their employer make the decision on their workplace pension provider, while only 31 percent would opt to choose it themselves.
Notably, this preference is more pronounced among women, with 75 percent favouring employer selection compared to 63 percent of men.
A generational divide is also apparent, as 66 percent of savers aged 18-54 prefer employer selection, while a substantial 85 percent of those aged 55 and above share the same sentiment.
A lack of confidence
The research also uncovered a lack of confidence among employed workplace pension savers when it comes to selecting a pension provider. A significant 55 percent expressed minimal confidence, stating they would be either not at all or only slightly confident in making such decisions. In contrast, a mere 19 percent conveyed being extremely or quite confident. The gender disparity in confidence levels is evident, with men displaying higher confidence levels (26%) compared to women (10%).
Furthermore, the survey delved into the perceived skills and knowledge required to compare workplace pension schemes and choose the right provider. The findings indicate that just under two-fifths (37%) believe they possess the necessary skills, while almost a third (31%) said they did not. Younger savers, particularly those in the 18-24 age group (44%), were more likely to express confidence in their skills compared to their older counterparts (27% of those aged 55+).
Employer support is crucial
Commenting on the research, Joe Dabrowski, Deputy Director – Policy at the Pensions and Lifetime Savings Association, emphasised the importance of employer support in choosing high-quality pension provisions. Dabrowski noted, “This research highlights the importance savers place on their workplace pension scheme and the support their employer provides in choosing and managing high-quality provision that will help deliver their retirement needs.”
As the government explores the concept of a Lifetime Provider model, Dabrowski highlighted the need to carefully consider the implications for savers. He expressed concern about disparities in knowledge, understanding, and confidence, stating, “While the sector examines the concept of a Lifetime Provider, it is important that we carefully consider the implications the model may have on good saver outcomes.”
Dabrowski emphasized the need to address concerns about general financial literacy and savers’ engagement and understanding of pensions. He concluded, “This will be important for the majority of employees who do not want to choose their own provider and those who lack confidence in making their own choice. Equally, we must protect those who may have confidence but, in most cases, will not have the appropriate skills or knowledge to make good choices.”
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.
