1. What information do people need about pensions?
16/07/2014
What information do people need about pensions?
Daniela Silcock, Head of Policy Research, Pensions Policy Institute
TUC conference - People and pensions: a decent retirement age for all
1 February 2017

2. What information do people need about pensions?
The type of information that people need depends on policy and personal circumstances
Information needs vary through the life course
Not everyone has the ability to use information
Other policy levers are important for achieving positive pension outcomes

3. Circumstances affect required level of information
16/07/2014
Circumstances affect required level of information
Defaults or compulsion – automatic enrolment
Scheme type – DB, DC; master trust, GPP
Employer approach – contribution level, communications, scheme choice

4. What information do people need about pensions?
The type of information that people need depends on policy and personal circumstances
Information needs vary through the life course
Not everyone has the ability to use information
Other policy levers are important for achieving positive pension outcomes

5. Childhood How does the economy work? How do I manage my own money?
16/07/2014
Childhood
How does the economy work?
How do I manage my own money?
What is a pension?
Should I save?
How does one juggle competing financial priorities?

6. Young adulthood Should I opt-out of my pension or stay in?
16/07/2014
Young adulthood
Should I opt-out of my pension or stay in?
Should I opt-in or find some other form of provision?
What is my aim?
How much should I save?
What can I expect from my employer?

7. Adulthood How will I support retirement? When might I retire?
16/07/2014
Adulthood
How will I support retirement?
When might I retire?
Am I on track to meet my retirement goals?

8. Approaching retirement
16/07/2014
Approaching retirement
When and how will I leave work?
How will I support myself in retirement?
Am I hedging against inflation and longevity risk?
Do I have dependents who require support?
Might I have care needs soon myself?
How can I determine whether someone is a fraudster?

9. At and during retirement
16/07/2014
At and during retirement
When and how am I retiring?
What is my eligibility for and how can I take State Pension/state benefits?
How do retirement income products work?
What is the potential impact of longevity, inflation, market turbulence and the need for care on my future income?

10. What information do people need about pensions?
The type of information that people need depends on policy and personal circumstances
Information needs vary through the life course
Not everyone has the ability to use information
Other policy levers are important for achieving positive pension outcomes

11. People receive different levels of information and guidance offers during the life course
School and workplace
Scheme communications
Other guidance – the Pensions Advisory Service, Money Advice
Government – communications about state pension, Pension Wise
Pre-retirement statutory communications – wake up pack
Media

12. Information, guidance and advice can help people to make more informed decisions
Financial education (formal and informal) improves financial capability
Discussing retirement issues with peers clarifies risks and options for people
People respond well to media campaigns and to free guidance (if offered at the right time)

13. Internal and external factors influence work and retirement transitions
Transitions can be involuntary, particularly among people of lower socio-economic classes
“Decisions” can be influenced by internal and external factors:
Affective (emotional/feeling) factors
Behavioural factors
Attitudes towards external stakeholders
Structural factors

14. Not everyone has the ability to understand and use information
Skills and knowledge necessary to make an informed decision about accessing DC savings
What options are available
Longevity risk
Potential future needs incl. health/social care
Economic factors:
Inflation
Market risks and returns
Understanding of compound interest (and charges)

15. Numeracy is correlated with the ability to make “good” pension decisions
Numeracy levels are low in the UK. Among UK adults:
Around 4 in 5 adults have a low level of numeracy (below GCSE grade C level)
Nearly one in five people cannot correctly identify the balance in a bank statement
A third of adults do not understand the impact of inflation on purchasing power

16. Cognitive ability and strength of behavioral barriers change over the life course
Younger people have higher cognitive ability and are more able to learn and adapt as a result of receiving information
Behavioural barriers and biases strengthen over time and experience
Cognitive barriers grow stronger during older ages

17. What information do people need about pensions?
The type of information that people need depends on policy and personal circumstances
Information needs vary through the life course
Not everyone has the ability to use information
Other policy levers are important for achieving positive pension outcomes

18. Other policy levers are important
For those with low levels of financial capability or cognitive barriers, defaults, compulsion (and safety nets) will play a significant role in ensuring positive outcomes – (e.g., automatic enrolment)
Complex lessons in economics may be unhelpful for those who are not very engaged
Regulation and governance will need to ensure protection for those with varying degrees of financial capability, against high charges, fraud and other potential sources of detriment