21 million adults unaware of A-day
With A-Day fast approaching (6th April, 2006)* latest research from MINTEL finds over two in five (43%) British adults are still unaware of the imminent pension changes. This equates to some 21 million adults. Surprisingly, even amongst those with a pension, as many as one in three adults know nothing of these reforms.
MINTEL's exclusive consumer research shows that not only are millions unaware of A-Day, but that key proposals of the Turner Report are unlikely to receive a warm welcome from the British public.
A-Day is set to transform the industry as a new set of pensions rules will come into effect simplifying the system by establishing a single tax regime. At the same time the Turner Report*, published in November last year is expected to be influential in the drafting of the government white paper on pensions reform due this summer.
The Turner Report recommends compulsory pension contributions but MINTEL research finds over half (53%) of British adults 'do not believe that people should be forced to pay money into a pension'. And while the report also suggests raising the current retirement age, only a minority of people are 'prepared to work beyond 65 to guarantee a higher retirement income'.
Today, around half (51%) of non-retired adults remain unpensioned, with a core group (47%) of the population still unconvinced that pensions are the best way to save. Looking at the factors which would encourage more people to contribute to a pension, the issue of trust is key. Indeed, if consumers knew that their money would be there when they retire, some three in ten (29%) would be encouraged to contribute to a pension. Other major incentives are a certainty that they would get considerable return on their savings/investment (23%) and if they were able to pass on the remainder of their pension fund to relatives when they die (19%).
"It is surprising to see just how few people are aware of A-day, considering the impact it is expected to have on the pensions industry. While A-day should have a positive effect on pensions for those already contributing and for those who can afford to save, the fact remains that it does little to address some of the key issues of the industry. One of the major problems is that the majority of non-retired adults still simply have no pension provision but A-Day is not expected to close this savings gap. And although the proposals put forward by the Turner Report are set to narrow the gap, as we see from our research these are unlikely to be very well-received. Finally, there is clearly a distinct lack of trust amongst the British public when it comes to pensions and neither A-Day nor the Turner report combat this problem. In addition to these reforms, the industry will clearly need to continue to focus on rebuilding its image and proving its trustworthiness," comments Paul Davies, senior finance analyst at MINTEL.
* On 6 April 2006, also known as A-day, a new set of pensions rules will come into effect, replacing the eight sets of rules that currently govern the UK’s pensions system. This simplification of the system, with the establishment of a single tax regime, is a revolutionary reform that is widely expected to transform the industry. Indeed, consumers will have more flexibility with how they save into a pension, how much they save into a pension and how the benefits are drawn at retirement. Taking into account the fact that many consumers will be given far greater choice when investing in pensions, it is hoped that the A-day reforms will ultimately increase sales of pensions.
The Turner Report, published in November last year is expected to be influential in the drafting of the government white paper on pensions reform due this summer. The main proposals were that all employees would be automatically enrolled into a National Pension Savings Scheme as well as a gradual increase in the state pension age to 68 by 2050.
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