A recent survey conducted by the Social Market Foundation (SMF) in collaboration with pension and savings fintech Cushon indicates a high level of support among younger generations for the concept of a single pension pot for life.
The survey, which polled UK workers, highlights a growing preference for greater control over pension contributions and aims to address concerns about small pension pots that can accumulate due to job changes over a person’s career.
Support for ‘Pot for Life’
According to the survey findings, nearly 80% of respondents aged 25-54 expressed support for the idea of a pension ‘pot for life’, where individuals have the autonomy to manage their pension funds. This sentiment is particularly strong among 25-34 year olds, with 78% in favour, followed by 73% among 35-44 year olds and 69% among 45-54 year olds.
The survey results coincide with ongoing government consultations on the implementation of a ‘lifetime provider model’ to address the issue of small pension pots resulting from job changes. While the pensions industry has raised concerns about potential barriers to implementation, such as market competition and engagement levels, the SMF suggests that a ‘pot for life’ model could offer a solution by empowering individuals to direct their pension contributions.
Promoting Member Choice and Engagement
The survey also explored public attitudes towards member choice in pension schemes, revealing that 72% of workers with a Defined Contribution (DC) pension support the concept. Despite this widespread support, only 28% of respondents who favoured member choice indicated that they would actively switch to a different pension provider than their employer’s. Additionally, a significant portion of respondents expressed satisfaction with their employer managing their pension and indicated a reluctance to actively manage their pension contributions.
The SMF emphasises the need for policymakers to take proactive measures to encourage greater engagement among pension consumers. While member choice reflects evolving preferences in the workforce, policymakers must provide reassurance and support to address consumer inertia and facilitate a smoother transition towards active pension management.
Expert Insights
Niamh O Regan, Researcher at Social Market Foundation, underscores the importance of addressing the challenges posed by fragmented pension savings and inadequate retirement provisions. She highlights the potential of a ‘pot for life’ model to consolidate pension savings and provide individuals with greater control over their financial futures.
Steve Watson, Director of Policy & Research at Cushon, emphasises the role of engagement in improving retirement outcomes. He believes that a single pension pot that follows individuals throughout their careers can enhance engagement by fostering a sense of ownership and accountability over pension contributions.
