Public confidence in pensions has hit a record low in the ongoing fallout from the financial crisis, the National Association of Pension Funds warns.
The yearly autumn confidence survey showed that 48% of working adults said that, compared to other ways of saving, they are not confident in pensions. 42% said they are confident, resulting in a Pensions Confidence Index of -6%.
This was the first dip into negative confidence in the Index’s four year history. In 2010 the index was +5%, and in 2009 it was +11%.
The NAPF believes the sharp fall reflects low consumer confidence, negative perceptions about a pension's inflexibility and costs, and recent heavy stock market falls.
The survey, run by pollsters Populus, also showed that six out of ten people (58%) are not confident that their pension will give them enough money to live on in retirement. Only a third (33%) were confident.
Joanne Segars, Chief Executive of the NAPF, said: “Confidence in pensions has slumped at a time when it needs to be growing. It’s worrying that from next year millions of people will be auto-enrolled into a savings vehicle they have so little faith in. Politicians have to boost confidence in pensions, or people will simply opt out. We need a pension framework that the public can believe in and rely on.
“We urge the Coalition Government to do more to fulfil its own pledge to reinvigorate pensions. It must get on with reforming the state pension by setting a simpler, single tier system. This would set a clear foundation for retirement on which people can build their workplace pension and savings.
“The economic downturn has eroded faith in pensions, and the recent sharp stock market falls have also put many people off. Household incomes are very tightly squeezed and, with bills to pay, pension outlays can seem like the weakest link. There’s also a perception that the goalposts are constantly being moved, so the Government must stress the importance of saving.”
The survey of 896 working adults also picked up further signs of the erosion in popularity of pensions. 28% still rate a pension as the most important benefit, but this was a clear fall from 41% in 2010. Meanwhile, the share that picked flexible working as the best perk rose from 17% in 2010 to 26% this year.
Similarly, 35% said a pension is the best way to save for a retirement, down from 44% in 2010. The proportion who named property rose from 20% to 25%, and ISAs grew from 12% to 15%.
Segars added: “More people are rating flexible working as the best workplace benefit, while pensions have slipped in popularity. This might indicate that people are thinking about today, rather than saving for tomorrow. But without a good plan for retirement, they may end up working flexibly for a lot longer than they intended.
“The survey nonetheless shows that a pension remains important to many people. Overall, it’s still the most popular workplace benefit, and one in three says it’s the best way to save for retirement.”