Non-transparent charges a block to auto-enrolment
Around three million workers are likely to turn their backs on the Government’s auto-enrolment scheme, with over a quarter put off because they don’t trust the pensions industry.
New research conducted by Populus for the National Association of Pension Funds (NAPF) suggests that one in three people will shun auto-enrolment, up from one in four in 2007.
Of those likely to opt out, 48% said they couldn’t afford the contributions, 29% didn’t trust the Government and 26% viewed the pensions industry as untrustworthy, particularly when it comes to charges.
Suspicion about charges was echoed elsewhere in the survey; 80% of respondents wanted greater transparency about how pensions work and what they cost.
Given this is likely to be a major obstacle to the success of auto-enrolment, NAPF is convening a summit on charges and transparency that will involve consumer groups, industry leaders, employer bodies and employee groups.
The aim is to kick-start the development of an industry code of practice covering these areas.
The Association’s chief executive, Joanne Segars, comments: “There’s no point in bringing people into a pension if their savings are going to be eaten away by fees and charges which they can’t understand. They’ll simply walk away.”
She adds: “The pensions industry has to be much more upfront about what it is doing. People need information about their pension in a form they understand.”
According to Ms Segars, information on charges and fees needs to be in pounds and pence, not basis points and unit prices.
Category: Insurance News
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