Unique insight into the current attitudes towards pension investment

Prevailing concern among savers regarding their capability to make informed investment decisions

A comprehensive survey has unveiled a complex picture of how savers perceive their pension investments. Despite a high level of awareness, with 82% of pension savers acknowledging that their pensions are invested, a mere 26% possess knowledge about the specifics of these investments[1]. This gap in understanding presents a unique insight into the current attitudes towards pension investment among savers.

Quest for simplicity and security
The survey findings further disclose a prevailing concern among savers regarding their capability to make informed investment decisions. A significant majority, 69%, doubt or accept they do not have the necessary skills to decide on the allocation of their pension scheme’s investments.
This has led to a notable preference for simplified investment choices, with 58% desiring limited, straightforward options and another 26% preferring to delegate investment decisions entirely to their scheme. Only 16% wish to retain full autonomy over their investment choices.

Risk aversion and environmental considerations
Moreover, the survey highlights a strong inclination towards risk aversion among participants, with 69% prioritising the safety of their pension savings above the potential for higher returns.

This cautious approach is coupled with an emerging environmental consciousness, as 44% of respondents consider it crucial for their pension provider to make environmentally friendly investments, irrespective of the financial return.

Support for local investments and tax incentives
There is also a clear call from savers for greater encouragement of pension schemes to invest within the UK, with 67% supporting tax incentives for such investments – a figure that rises to 74% among those aged over 55.

Interestingly, while there is a substantial desire for local investment, with 53% expressing a preference for allocating some of their pension to UK companies, there remains a divided opinion on government intervention. Half of the respondents believe that the UK Government should not mandate where pension funds are invested, revealing a nuanced stance towards regulatory involvement in pension investments.

Simplicity, security and sustainability
This survey sheds valuable light on the complex landscape of pension investment preferences in the UK. It underscores a collective yearning for simplicity, security and sustainability in pension investment choices, alongside a cautious but clear interest in bolstering the national economy through targeted investments.

As the dialogue around pension investments continues to evolve, pension providers and policymakers must heed these insights and adapt their strategies accordingly.

Source data:
[1] Independent research carried out online by Yonder consulting with a nationally representative sample of 773 employees actively saving for a DC workplace pension.

THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.