Whilst the majority (80 per cent) of savers think they should have the opportunity to choose which pension scheme their contributions are paid into, half are concerned about knowing this responsibility rests with them, research from Fidelity International has found.
The research showed that while savers are attracted to the concept of freedom and flexibility that a ‘pot for life’ provides in principle, in reality the picture is “very different”, with the majority of employees taking comfort in the safety net their existing employer model provides.
Indeed, the research found that nearly two thirds (65 per cent) said that while they like the idea of giving savers the opportunity to choose, they would most likely remain with the pension provided by their employer.
In addition to this, 75 per cent agreed that they like the idea of being able to choose their workplace pension provider but would want access to advice or guidance to help inform their decision, and 50 per cent agreed that they would feel concerned about knowing the responsibility for choosing their workplace pension rests with them.
Furthermore, more than half (51 per cent) said they are worried that a member choice model could widen the pension gap between those who are financially confident and those who aren’t.
This is in line with research from the Association of British Insurers (ABI), which suggested that the government’s plans to introduce a lifetime provider model could fundamentally change the role of the employer and have a negative impact on saver outcomes.
Fidelity International’s head of platform product policy, James Carter, highlighted the findings from this report as demonstration of the potential risks posed by the introduction of lifetime provider models, warning that a lifetime provider, or pot for life model, "would radically change the UK pensions market and unwind much of this progress".
He stated: “While we welcome the government actively engaging on the topic of pensions and its efforts to create more secure financial futures for the population, we echo the ABI’s concerns about the proposals being put forward.
“‘Pot for life’ proposals could be harmful to those whom automatic enrolment was designed to benefit. We need to stay focused on the successful delivery of other initiatives, such as the development of pensions dashboards, already in flight, and turn soonest attention to increasing the levels of pension contributions being made.”
