Research shows that less than one in five would stick to proposed pension reforms.
Personal accounts are under threat as the political consensus that established them has, over the past few months, become increasingly fragile. However it now seems that the general public is not in favour of personal accounts, with just one in five (19%) saying they will remain automatically enrolled in the government’s proposed pension reforms.
The YouGov research [1] commissioned by AXA to coincide with their Living on a State Pension experiment as part of My Budget Day, showed that:
- Just 19% of people will remain enrolled in personal accounts when they are introduced
- 36% would actively opt out of the system, particularly men (40%) and the middle-aged working generations (over 40% of 35-54 year olds). A quarter of all 18-34 year olds will be taking this step
- 20% would chose to stick with alternative retirement provisions – with 10% more men than women opting for this (25% and 15% respectively)
- 10% of people claim they would not be able to afford to commit the required amount out of their salary, particularly women and the younger generation
- 6% (rising to 11% of all 18-24 year olds) don’t understand or perhaps, more importantly, don’t trust the proposed concept of personal accounts.
Additional research [2] shows that alarmingly almost 7% of the UK population, associate the term ‘personal accounts’ with email addresses and almost one in ten (9%) had never heard of them. On a more positive note, almost a quarter (23%) associated them with sensible planning.
As part of My Budget Day, AXA is encouraging everyone to look at their retirement provisions whether they are 25 or 50, to enable them to make the right decisions to ensure they can support themselves in their later years.
Mike Morrison, Head of Pension Development at AXA said: “Our research shows that there is a lack of support for and understanding of Personal Accounts among the UK population, which may be a direct result of largely negative commentary directed at them over the past few months. As such it is clear that the Personal Accounts Delivery Authority has some key challenges that it will need to successfully address in order to win public confidence and ensure longevity for the scheme.
“It is vital that a programme of communication and information is put in place as part of the Personal Accounts initiative. The aim should be to show the true value to people of the money that they will be putting into the scheme
“There is no question that any development that enables people who do not have access to a pension scheme to save for their retirement is a positive step forward, however it is clear that people will need help and guidance in understanding the decisions they will need to make.”
AXA believe the success of Personal Accounts will ultimately be judged by the effect they have in increasing the number of people saving for their retirement and in increasing the total amount saved by the population. Whether Personal Accounts is capable of achieving these in their current form is yet to be known.
Morrison continues “In our view, the reforms will not be successful if they largely move current (and future) savings – and savers – from occupational schemes, especially where many of these make total contributions at significantly higher levels than those proposed for Personal Accounts. If this turned out to be the case, then the introduction of Personal Accounts would likely result in reduced provision for those people with some retirement savings in place, and at the same time add another element to an already complex pension system.”
[1] Research completed by YouGov Plc. Total sample size was 2110 adults. Fieldwork was undertaken between 15th – 16th October 2009. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
[2] Research completed by OnePoll amongst 2000 UK adults in October 2009
