What savers really think about their investments

For pension professionals, understanding the sentiments of pension savers can serve as a crucial compass. The PLSA’s recent survey investigated the current understanding and needs of UK pension savers regarding pension investments and offers valuable insights into their attitudes and preferences.

Keep it simple

One of the most striking observations from our survey is the significant gap between savers' awareness of their pension investments and their actual understanding of them.

While a massive 82% of respondents acknowledge that their pension is invested, only 26% felt they understood how their fund is invested. This disparity underscores that many pension savers need meaningful support if they are to make informed decisions about their retirement savings.

Equally noteworthy is the resounding preference for simplicity among many pension savers. As many as 69% of respondents admit to being uncertain about their ability to choose how their pension scheme should be invested.

Consequently, a significant portion of savers (58%) express a preference for schemes that offer a few straightforward investment options, while 26% would rather delegate their investment decisions to their pension providers. Only 16% of respondents expressed a preference for full control over their investments.

However, the focus on pension investments extends beyond financial returns; values also play a significant role in shaping savers’ preferences. The majority of respondents (69%) prioritise protecting their pension savings from downside risks over chasing higher returns, emphasising the importance of security and stability in retirement planning.

In addition, environmental considerations emerge as a key factor for 44% of respondents, indicating a growing awareness of the interconnectedness between pension saving and environmental stewardship.

The findings also highlight widespread support (67%) for tax incentives aimed at encouraging investments in UK companies, particularly among older savers.

However, there is also a note of caution regarding government intervention in directing investment destinations, with half of respondents expressing concerns about such interference. This shows the delicate balance that pension schemes must strike between meeting the expectations of savers and navigating regulatory frameworks set by policymakers.

Be mindful of the individual

The insights gained through this survey underscore the importance of simplicity, transparency, and alignment with savers' values in pension investments.

Pension funds and providers must prioritise clear communication and accessible investment options to empower savers to make informed decisions about their retirement funds. They must also consider the diverse views of pension savers, recognising that behind every data point lies an individual with unique retirement aspirations and concerns.

As we look towards the future, it is clear that both the government and the pensions industry have a vital role to play in shaping the UK’s approach to pensions. By incorporating these recent insights into policy development and industry practices, we can work towards a retirement landscape that better serves the needs and aspirations of pension savers across the country.

Ultimately, the goal is to provide savers with the tools and resources they need to navigate the complexities of pension investments with confidence and peace of mind, ensuring a secure and adequate retirement for all.

With simplicity, transparency, and alignment with values at the forefront, the pensions industry can pave the way for a brighter financial future for pension savers in the UK.

Nigel Peaple is director of policy and advocacy at the Pensions and Lifetime Savings Association