Three-fifths of Pension Scheme Members Feel Disconnected from their Pensions, According to Report
SEI Research Reveals Pension Ownership Gap
LONDON, 14 Feb., 2023 – SEI® (NASDAQ: SEIC) today unveiled new research* that reveals more can be done to drive pension engagement and ownership. Despite positive progress with more than 10 million people now auto-enrolled into a workplace pension scheme, nearly three-quarters (74%) of workplace pension savers report low or no ownership of their pensions.
According to the “Creating an Ownership Mindset” report, nearly three-fifths (59%) of members do not feel connected to their pensions, most prevalent among those with the lowest amounts saved. Over half (52%) of those with pots between £50,000 and £100,000 said that they felt disconnected from their pensions, while three in 10 (31%) of those with pots over £100,000 indicated they felt this way.
With four in five (80%) saying they like to feel in control of their finances but just one in five (18%) saying they feel in control of their pension, the report highlights a clear gap between contribution and ownership.
The majority of members believe that as long as they have a pension, they will have financial security in retirement. Nearly two-thirds (65%) of respondents agreed with this statement: “My employer set the pension up, and I trust that they are making sure I am paying in enough to have a comfortable retirement.” Of those currently paying the minimum employer and employee contributions, a worrying seven in 10 (70%) feel this way.
Members are inherently aware that they should be doing more. Over three-quarters (78%) of members say they should know more about pensions, but this does not currently translate into action. Four-fifths say they don’t know what happens when they retire and want to take money out of their pensions.
Steve Charlton, Managing Director of Defined Contribution and Solutions for SEI’s Institutional Group, EMEA and Asia, commented:
“While auto-enrolment has greatly succeeded in getting people to save for their futures, our research highlights an ownership problem when it comes to their pensions. The current engagement model has not been working well enough to shift the dial, and by all accounts, fixing the ownership gap won’t be easy. A fundamental shift in industry thinking is required.
“By focusing on engagement, we have been starting in the wrong place, driving push behaviours—such as telling, explaining, and stating—which don’t create ownership. There’s an assumption that if we just communicate more clearly and directly, people will understand it. Our research shows that this is a flawed theory and that we must foster a deeper emotional connection between members and their retirement savings.”
Notes to editors
* This research was conducted by Ignition House among over 1,000 pension scheme members during September 2022.
SEI (NASDAQ:SEIC) delivers technology and investment solutions that connect the financial services industry. With capabilities across investment processing, operations, and asset management, SEI works with corporations, financial institutions and professionals, and ultra-high-net-worth families to solve problems, manage change and help protect assets—for growth today and in the future. As of Dec. 31, 2022, SEI manages, advises, or administers approximately $1.2 trillion in assets. For more information, visit seic.com.
The SEI Master Trust provides a fully-bundled solution for employers delivering defined contribution (DC) schemes. An independently-assured DC provision, the Master Trust encompasses investment management, member communications and administration, as well as utilises a manager-of-managers platform established over 25 years ago and overseen by more than 100 in-house investment experts. With its global scale and 15-year heritage as one of the first U.K. Master Trust providers, the SEI Master Trust offers customised solutions and a complete member journey, guiding members through retirement and beyond.
SEI’s Institutional Group provides clients with a variety of solutions aligned with their investment implementation preferences. As one of the first and largest providers of outsourced investment management services, SEI’s Outsourced CIO (OCIO) platform supports institutional investors who delegate investment management decisions through a flexible implementation model. SEI's Enhanced CIO (ECIO) platform supports internal investment teams through alternative investment solutions and data and analytic services and technologies. More than 465 institutional clients utilize these integrated solutions worldwide as of Dec. 31, 2022. For more information, visit seic.com/institutions.