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Pension reform: consumers lack trust in financial services, says Which?

1 November 2006

Consumers value trust and simplicity over everything else when it comes to Personal Accounts* – and they don’t trust the financial services industry to manage the scheme in their best interests, according to new research from Which?

A survey of over 500 people** found:

  • More than four in five respondents (85 per cent) think it is important or very important to be able to trust the organisation that is running their pension scheme.
  • Almost half (47 per cent) felt that they would most trust an independent body to manage a Personal Accounts system in their best interests.
  • Only one in ten (10 per cent) would most trust the financial services industry to manage a Personal Accounts system in their best interests.
  • Six in ten (60 per cent) feel that it is very important for a Personal Accounts scheme to be simple and easy to understand.

Doug Taylor, personal finance campaigner from Which? comments:
“As financial services companies argue amongst themselves about who could provide a Personal Accounts system offering the most bewildering array of marketing materials or the biggest choice of funds, Which? is calling for the consumer voice to be heard.

“This research shows that consumers want a fair framework for Personal Accounts that is simple, low-cost and sustainable and which they can trust.

“Ceding control to the financial services industry on this essential issue would create a hostage to fortune. We have a once in a generation opportunity to create a pension system which consumers can have confidence in.

“The industry could not be trusted to deliver on the government’s flagship stakeholder pensions policy a couple of years ago and it can’t be trusted now. Therefore, Which? is still standing by the Pensions Commission’s version of Personal Accounts.”

Notes to editors:

*The Pensions Commission, chaired by Adair Turner, was set up in 2002 to review the UK private pension system and long-term savings. Personal Accounts is a retirement savings scheme created by the government to come into force in 2012. It is primarily aimed at low to medium wage earners to increase overall pension savings. It will be an auto-enrolment scheme, with contributions from both employee and employer and will be low cost and portable. At present various bodies are offering their recommendations to the government on how the model for Personal Accounts should look. Which? supports the Pensions Commission recommendations for a Personal Accounts model.

**Which? spoke to 528 people aged 15+ who were either working or seeking work (and not retired) via IPSOS’s face to face omnibus survey during September 2006.



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