UK - Schemes must radically overhaul their communication processes if the voluntary approach to pensions is to survive, Hewitt Bacon & Woodrow claims.
Consultant Tony Bailey says automatic scheme enrolment alone will be insufficient to adequately boost savings levels.
He says employers must take account of the biases and influences that affect their workers’ decision-making processes as people are not “rational calculating machines”.
One way to boost pension savings is if employers can convince workers to commit to increasing their contributions at a later date.
Members often think solely in terms of take-home pay Bailey explained, so if the increases coincide with pay rises, they will believe that the increase has come at little or no extra cost.
And to ensure that automatic enrolment boosts scheme membership and savings levels, Bailey said members must be presented with a limited range of simple options to choose from when they join their scheme.
He said that if members are faced with a complex situation, they will defer making a decision.
The Pensions and Lifetime Savings Association (PLSA) has announced it will shrink its board by more than one-third as part of a governance overhaul to make it "agile and more appropriate".
Smaller FTSE 350 defined benefit (DB) schemes were nearly 15 percentage points less well-funded than larger schemes in 2017, according to a Goldman Sachs Asset Management (GSAM) analysis.
The advent of collective pension systems could help the UK avoid demographic challenges which will make it "impossible" for society to help savers in retirement, experts say.