Report

Up for grabs

This report from UK think tank the Social Market Foundation presents evidence on public attitudes to the pension ‘pot-for-life’ proposal.

The Social Market Foundation recently published proposals for ‘member choice’ over pensions, whereby individuals can direct their contributions to a scheme of their choice. Meanwhile, the government is consulting on related proposals for a ‘lifetime provider’ model.

This paper presents evidence on public attitudes to these proposals, drawing on a survey of workers, and two expert roundtable discussions on the topic.

Among various issues in the UK pensions market, there is a deluge of small pots created as people move between jobs, as well as broader issues of adequacy and awareness. Government plans to consolidate schemes will help to reduce the number of existing pots, but they will not stop new pots from being created.

‘Member choice’ could help stop the proliferation of small pots, and has the potential to empower savers and boost engagement. Employees would tell their employers where to send their pension contributions, rather than starting anew with each career move.

The public wants the option of member choice: our survey found that 72% of respondents are in favour of the idea, and those with higher levels of educational attainment and existing pensions engagement are more likely to be in favour.

This is not just about convenience – people are as likely to say they are motivated by value for money as consolidating pensions.

However, most people want the option of choice rather than wanting to actually exercise that right, and although member choice might prompt some increased engagement, but we should not expect too much.