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Negative reports hit pensions

People are being turned off saving by the negative publicity that continues to dog pensions, leading advisers to raise concerns about the effects of “sensationalist” research such as the recent Consumer Focus report.

A British Population Survey of 1,002 people, conducted in December 2010 on behalf of Alan Steel Asset Management, found that around 26 per cent were employed but were not making any pension provision.

Out of the 266 people who fell into this category, 7 per cent say they do not contribute into a pension scheme due to bad publicity over pensions. Only 4 per cent do not pay into a pension because charges are too high.

Over 50 per cent say they do not have a pension because they cannot afford one while 14 per cent say they do not trust pension companies.

Informed Choice managing director Martin Bamford says: “Bad publicity influences people, so I am not surprised it puts some people off becoming a member of a pension scheme.

“There is a danger when organisations like Consumer Focus come forward with sensationalist findings which get converted into big, bold headlines. That is what the majority of consumers read and they are unlikely to dig down into the detail.”

Syndaxi Chartered Financial Planners managing director Robert Reid says: “The Consumer Focus research was awful because it is totally focused on charges. The idea that charges have been a massive problem is a nonsense. But bad publicity is a problem and I think any organisation thinking of producing some research which could put people off saving needs to think twice before publishing it. We all have a responsibility to encourage more people to save.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. The government’s failure to honour its pre-election promises to undo the damage done to pensions by its various predecessors over the past 25 years has hardly helped either, allied of course to rock-bottom annuity rates.

    Charges now for most pension contracts must surely be the lowest they’ve ever been, though the pensions framework is so complicated that advice on the subject can never be cheap. Were the government to take heed of the clamour for true simplification, that could be fixed with some sound back-to-basics thinking on the subject. Make retirement saving as simple as an ISA, subject only to the stipulation that one’s accumulated fund must be applied for the provision of a lifetime income unshackled by annuity rates and without the current punitive (and thus offputting) tax charge on unspent funds after death. It really could be that easy.

    But civil servants, secure with their gold-plated, index-linked final salary pensions never listen. And so the savings gap continues. NEST won’t fix things either. It’ll just be compulsory participation in a system that everybody hates.

  2. I’m afraid Julian you are doing precisely what you are condemning. Castigating Auto-Enrolment is yet someone else knocking pension arrangements.
    Nothing is perfect, not even thee and me, but we have to start somewhere, so let’s try to make the best use of what tools we are given. If something is wrong by all means say so, but Auto-enrolment is not wrong, though it may be inadequate – actually having been thought out by a bunch of Civil Servants it will automatically be inadequate.
    But let’s build on what we are given. It’s better than nawt, which is currently the only other alternative. Let’s make Auto-enrolment a good first step, but not an only step.

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